2006 (5) TMI 106 - SC - Central Excise

Benefit of the exemption Notification No. 5/99-C.E. dated 28th February, 1999 - Held that - if the manufacturer has not availed the MODVAT credit in respect of the duty paid of inputs in respect of the goods mentioned in column No. 2 or any other product manufactured in the same factory benefit of notification is available in respect of the specified goods. The intention of the notification is to put restriction on the manufacturer not to avail the credit of duty on the product in respect of which the exemption is availed or on any other product manufactured in the same factory. The condition No. 10 of the notification does not mention that the manufacturer could not avail the MODVAT credit in all the factories under him - No ground to interfere with the order - Decided against Revenue.

Summary

Issues:
Interpretation of Notification No. 5/99-C.E. dated 28th February, 1999 regarding availing of exemption benefits in different factories owned by the same manufacturer.

Analysis:
The case involved an appeal under Section 35L(b) of the Central Excise Act, 1944, where the Revenue challenged an order passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi. The Tribunal had allowed the appeal filed by the assessee, setting aside a demand created in a show cause notice dated 2nd of March, 2001. The issue revolved around the entitlement of the respondent-assessee to avail the benefit of the exemption Notification No. 5/99-C.E. dated 28th February, 1999.

The assessee had two factories engaged in manufacturing plastic pet jars, bottles, capes, falling under Chapter Heading 3923.90 of the Central Excise Tariff Act, 1985. While one factory availed the benefit of the said notification, the other cleared goods on payment of duty at full tariff rates, claiming MODVAT credit. The Revenue contended that since the assessee was availing MODVAT credit in one factory, the exemption was not available under the Notification. On the other hand, the assessee argued that the condition in the notification pertained to goods manufactured in the factory, not to the manufacturer, and since MODVAT credit was not availed in the factory benefiting from the notification, they were entitled to the exemption.

The Tribunal's interpretation of Condition No. 10 of Notification No. 5/99-C.E. was crucial. The Tribunal held that the intention of the notification was to restrict the manufacturer from availing credit of duty on the products for which exemption is claimed or on any other product manufactured in the same factory. The condition did not specify that the manufacturer could not avail MODVAT credit in all factories under them. Therefore, the Tribunal concluded that the assessee was entitled to the benefit of the notification based on the specific conditions outlined in the notification.

The Supreme Court, comprising Justices Ashok Bhan and Dr. A.R. Lakshmanan, concurred with the Tribunal's interpretation and decision. The Court found no grounds to interfere with the Tribunal's order and dismissed the appeal, stating that no costs were to be awarded. This judgment clarifies the application and interpretation of the conditions laid down in exemption notifications concerning the availing of benefits across multiple factories owned by the same manufacturer.