2012 (9) TMI 874 - AT - Central Excise

Benefit of small scale exemption notification - Instead of availing the captive exemption Notification No. 10/96-C.E., the respondent s availed the benefit of credit on the raw material used for the manufactured polyjars and paid duty on the polyjars, took credit of the said duty and utilized it for further payment of duty on the final product - Held that - Admittedly, in terms of Notification No. 9/2002-C.E., polyjars is one of the specified items in the Annexure to the said notification. As such, the appellant was within his rights to opt for any one of the two notifications. The benefit of captive consumption Notification No. 10/1996-C.E. cannot be thrusted upon the assessee. The period involved in the present case is around 2002 and there are number of judgments laying down that when there is an exemption Notification, the assessee cannot be compelled to avail the same and he has an option to avail or to pay duty on the goods manufactured by them - Decided against Revenue.

Summary

Issues:
- Interpretation of small scale exemption notification for manufacturing vegetable products
- Availing benefit of captive exemption Notification No. 10/96-C.E. versus Cenvat credit under Notification No. 9/2002-C.E.
- Applicability of judgments on exemption notifications and assessee's rights

Analysis:
1. The case involves the interpretation of a small scale exemption notification by a company engaged in manufacturing vegetable products. The company was also producing polyjars for captive use in packaging their final product. Instead of utilizing the captive exemption Notification No. 10/96-C.E., the company opted to take credit on raw materials for polyjars, paid duty on the polyjars, and used the credit for further duty payments on the final product.

2. The Revenue contended that the company should not have paid duty on the captively consumed polyjars. However, the Commissioner (Appeals) noted that the company had the option under Notification No. 9/2002-C.E. to avail Cenvat credit and pay duty at a concessional rate for goods manufactured, including polyjars. The company, having availed Modvat credit, was within its rights to choose Notification No. 9/2002-C.E.

3. Upon reviewing the Commissioner (Appeals) order, the Tribunal found no flaws. The Tribunal emphasized that the company had the right to opt for either Notification No. 10/1996-C.E. or No. 9/2002-C.E., as polyjars were listed in the latter's Annexure. Referring to precedents, the Tribunal highlighted that under an exemption Notification, the assessee has the discretion to avail the exemption or pay duty on manufactured goods. The Tribunal dismissed the Revenue's case, affirming the company's choice under the applicable notifications.

4. Ultimately, the Tribunal rejected the Revenue's arguments, concluding that the company acted within its rights by opting for Notification No. 9/2002-C.E. over the captive consumption exemption. The judgment underscores the importance of an assessee's freedom to select between available notifications and pay duty accordingly, especially when exemptions are involved.

(Dictated and pronounced in open Court)