2006 (8) TMI 604 - AT - Central Excise

Summary

Issues:
1. Eligibility for exemption under Notification No.5/98-CE.
2. Interpretation of Condition No.10 of the Notification regarding availing credit of duty.
3. Effect of availing MODVAT credit on exempted and other goods.
4. Claim for MODVAT credit and re-computation of duty liability.
5. Treatment of sale price as cum-duty price for duty determination.
6. Imposition of penalty.

Issue 1: The dispute revolves around the eligibility of the appellant for exemption under Notification No.5/98-CE for goods classified under heading 39.23.90. The Tribunal remanded the case back for a fresh decision as no clear finding was recorded on whether the appellant met the conditions for exemption.

Issue 2: The interpretation of Condition No.10 of the Notification is crucial in determining the eligibility for exemption. The contention between the parties lies in whether the bar on availing credit of duty extends to all goods produced in the same factory or only to the specific products mentioned in column (2) of the notification.

Issue 3: The appellant availed MODVAT credit on inputs for both exempted and other goods manufactured in the same factory. The appellant argued that taking input credit on other products does not violate the condition, while the revenue contended that such availing of credit renders the appellant ineligible for the exemption.

Issue 4: The appellant sought a re-computation of duty liability after claiming MODVAT credit in accordance with the MODVAT Rules. The Tribunal directed the jurisdictional authority to determine the duty payable after allowing eligible MODVAT credit based on relevant records.

Issue 5: Regarding the treatment of sale price as cum-duty price for duty determination, the Tribunal directed the original authority to re-compute the duty based on settled legal principles established by the Supreme Court in previous cases.

Issue 6: The imposition of a penalty was contested by the appellant, arguing that there was no suppression or mis-declaration of facts to warrant penalty under Section 11A. The Tribunal agreed that the dispute was purely legal, and hence, set aside the penalty imposed in the impugned orders.

In conclusion, the Tribunal remanded the case for a fresh decision on the eligibility for exemption under Notification No.5/98-CE, emphasizing the interpretation of Condition No.10 regarding the availing of credit of duty. The appellant's claims for MODVAT credit, re-computation of duty liability, treatment of sale price, and the penalty imposition were addressed in detail, resulting in the orders being set aside or directed for further action in accordance with the law.