2011 (2) TMI 4 - SC - Central Excise

Availment of exemption notification - cenvat credit availed wrongly - It is by now a settled law that the exemption notification has to be construed strictly and there has to be strict interpretation of the same by reading the same literally. The appellants are availing such Modvat Credit in respect inputs used in the manufacture of the aluminum circles. Consequently, the appellants are not entitled to avail the benefit of Notification granting exemption inasmuch as for availing such benefit under the said notification the pre-condition is that the aluminum circles are to be cleared for intended use in the manufacture of utensils and no credit of duty paid on inputs has been taken in respect of the inputs used in the manufacture of the aluminum circles. All the aforesaid three authorities below having held concurrently in the same manner as stated hereinabove. Such finding has become final and it is not open to the appellants to challenge the same. We also hold that the appellants failed to bring any evidence on record that the appellants were not availing of Modvat Credit on the same goods in respect of which they were also claiming benefit of exemption under Notification.

Summary

Issues: Entitlement to benefit of Notification No. 180/88 CE dated 13.05.1988 as amended by notification No. 135/94-CE dated 27.10.1994.

Analysis:
The appellants, engaged in manufacturing aluminum circles and utensils, claimed benefits under Notification No. 1/93 dated 28.02.1993 and Notification No. 135/94-CE dated 27.10.1994. A show cause notice contended that the benefit of the latter notification was not available to the appellants. Subsequently, a demand was confirmed due to the denial of these benefits. The appellants appealed, arguing they fulfilled conditions of both notifications and could avail benefits simultaneously.

The Commissioner Central Excise held that the appellants did not fulfill the conditions of Notification dated 13.05.1988 as amended, as they availed Modvat Credit, rendering them ineligible for the benefit. The appellate authority also noted the lack of evidence from the appellants regarding fulfilling conditions for availing Modvat Credit.

The Customs, Excise and Service Tax Appellate Tribunal dismissed the appeal, stating that the appellants were availing credit for inputs used in manufacturing aluminum circles, making them ineligible for the exemption. The appellants, still aggrieved, filed the present appeals, which were heard by the Supreme Court.

The Supreme Court found that the appellants were indeed availing Modvat Credit for inputs used in manufacturing aluminum circles, making them ineligible for the exemption under the notification. The Court emphasized that the exemption notification must be strictly construed, and the claimant must satisfy the eligibility criteria, which the appellants failed to do in this case. As the authorities below had already concluded that the appellants did not meet the eligibility criteria, the Supreme Court upheld their findings and dismissed the appeals, with each party bearing their own costs.