2008 (10) TMI 91 - AT - Central Excise

Manufacture of uncoated kraft paperboards - certain cuttings and trimmings arising during mfg. were used captively - exemption Notification No. 67/95 benefit claimed at later stage but not at time of filing declaration - held that even if an applicant does not claim benefit under a particular notification at initial stage, he is not debarred from claiming such benefit at later stage - however exemption is subjected to fulfillment of conditions specified in notification ibid - matter remanded

Summary

Issues:
1. Exemption under Notification No. 67/95 for cuttings and trimmings used captively.
2. Admissibility of Modvat credit on capital goods.
3. Claim of exemption under Notification No. 10/96.
4. Requirement of declaration for availing exemption benefits.

Exemption under Notification No. 67/95 for cuttings and trimmings used captively:
The appellants, engaged in manufacturing kraft paperboards, claimed exemption for cuttings and trimmings under Notification No. 67/95. The issue arose when a show cause notice contended that since the final goods were cleared under exemption, the benefit of the notification was inadmissible. The appellate authority held the exemption to be inadmissible, disregarding the appellant's argument of partial exemption. The appellants also claimed Modvat credit, which was deemed inadmissible due to the exemption status. The advocate argued that the exemption was quantity-based, and they were entitled to it even if duty was payable after crossing the limit. The tribunal referred to previous decisions and Supreme Court rulings emphasizing that benefits under notifications could be claimed at a later stage. The matter was remanded for further verification.

Admissibility of Modvat credit on capital goods:
The appellate authority denied Modvat credit, stating lack of evidence on non-utilization during the exemption period. The advocate contended that if goods were exempted, no duty payment implied no credit utilization. The tribunal found merit in this argument, remanding the case for verification on credit utilization during the exemption period.

Claim of exemption under Notification No. 10/96:
The appellants sought exemption under Notification No. 10/96, which was rejected as they had not claimed it in their classification list. The Departmental Representative argued that the conditions for exemption were not fulfilled as no declaration was filed specifying compliance. Citing legal precedents, the tribunal noted that benefits under notifications could be claimed at a later stage, but conditions needed verification. The matter was remanded for the original authority to assess compliance with the conditions.

Requirement of declaration for availing exemption benefits:
The Departmental Representative emphasized the necessity of declaring intention to avail exemptions before removal of goods. Citing legal precedents, it was argued that without filing a declaration specifying conditions, verification for compliance became impossible. The tribunal acknowledged the importance of verifying conditions specified in notifications, remanding the case for further assessment.

In conclusion, the tribunal allowed the appeal by way of remand for detailed verification on exemption claims and Modvat credit utilization during the relevant period. The judgment highlighted the importance of verifying conditions for claiming exemption benefits and the need for evidence on credit utilization during exemption periods.