1999 (11) TMI 68 - SC - Central Excise

Summary

Issues involved: Interpretation of exemption notification u/s 180 of 1988 for aluminium pipes under Central Excise Rules.

Summary:
The appellants manufactured aluminium extrusions, including pipes, under an exemption notification. The notification exempted aluminium pipes for agricultural use from duty, subject to conditions. The issue arose when the appellants were asked to show cause for not reversing Modvat credit before clearing pipes, as required by Rule 57A, 57C, and 57F of Central Excise Rules. The Tribunal held that once exemption is availed, Modvat credit is subject to Rule 57C. The appellants had used the duty credit on inputs for other products, contrary to rules.

The Tribunal did not consider the second proviso of the notification, which specified certain items not eligible for exemption if duty credit on inputs was availed under specific rules. The Tribunal's interpretation that exemption for Item 16 was not optional was questioned. Rule 57C disallows credit for duty on inputs for products exempt from duty, which the proviso aimed to address. The exemption notification should be construed in line with Rule 57C, and the appellants were entitled to relief.

In conclusion, the civil appeals were allowed, setting aside the previous judgment. The appellants are entitled to consequential relief, with no order as to costs.