2010 (12) TMI 1047 - HC - Central Excise

Whether the option either to pay duty and avail exemption under Notification No. 53/88 or 14/92 is vested in the unit Held that - there is neither any specific nor implied bar in the 1986 Notification from opting for exemption under the other notification. On the contrary the explanation (ii) to the 1986 Notification suggests that in respect of packing materials it is a kind of a residuary notification and is applicable in case an assessee is not taking advantage of any other exemption. It impliedly permits taking of advantage of any other exemption decision in favour of the Assessee and against the Department

Summary

Issues involved:
1. Whether an assessee has the option to choose between two available exemptions for the same class of goods.
2. Entitlement to credit of duty paid on inputs when the resultant product is fully exempted under a specific notification.

Analysis:

Issue 1:
The main issue in this case was whether an assessee has the option to choose between two available exemptions for the same class of goods. The Assessee, a manufacturer of toners, was paying excise duty on bottles and caps under different notifications. The Adjudicating Authority modified the classification list and reversed modvat credit taken by the Assessee. The Assessee's appeals were dismissed initially, but the Tribunal allowed the second appeal. The High Court considered the conflicting notifications, namely the 1986 Notification and the 1992 Notification, and the question of whether the Assessee could choose either of them. The Court held that if goods are covered by two notifications, the assessee can choose any one unless there is a specific or implied bar in one of the notifications. In this case, as there was no bar in the 1986 Notification, the Assessee was entitled to choose the 1992 Notification for exemption.

Issue 2:
The second issue revolved around the entitlement to credit of duty paid on inputs when the resultant product is fully exempted under a specific notification. The Department contended that the 1986 Notification, being specific for goods captively consumed, should prevail over the general 1992 Notification. However, the Court held that the Assessee could choose the notification offering greater relief. The Court analyzed the evolution of exemption schemes from 1986 to 1992 and concluded that the Assessee was entitled to benefit from the 1992 Notification. As a result, the Court answered the first question in favor of the Assessee, rendering the second question irrelevant. The opinion was sent to the Tribunal for further action based on the High Court's decision.

In conclusion, the High Court held that the Assessee had the option to choose between available exemptions for the same class of goods and was entitled to benefit from the 1992 Notification. The Court's decision favored the Assessee, emphasizing the importance of analyzing specific and general notifications to determine the most beneficial option in cases of conflicting exemptions.