2000 (5) TMI 145 - AT - Central Excise

Summary

Issues:
1. Availment of exemption under Notification No. 1/93 dated 28-2-1993.
2. Recalculation of duty payable and imposition of penalty.
3. Scope of show cause notice in confirming demand of duty.
4. Benefit of Notification No. 1/93 for subsequent clearances.
5. Modvat Credit entitlement and re-quantification of demand.

Analysis:

1. The case involved the appellant firm, a S.S.I. Registration Holder, seeking exemption under Notification No. 1/93 dated 28-2-1993 for the manufacture and removal of M.S. Scrap. The Assistant Commissioner initially denied the benefit of exemption, requiring the appellants to pay full duty for subsequent clearances during the financial year. A demand notice was issued for clearance without payment of duty, leading to a confirmed demand and penalty imposition.

2. On appeal, the Commissioner (Appeals) held that the confirmation of the higher duty amount was not proposed in the show cause notice, limiting the demand to the initially proposed sum. The benefit of the Notification was deemed unavailable for subsequent clearances after full rate duty payment at the beginning of the financial year. The demand was revised to the proposed amount, and the penalty was upheld.

3. Both the appellants and the Revenue appealed against the Commissioner (Appeals) order. The Tribunal rejected the Revenue's appeal as the Assistant Commissioner's decision exceeded the scope of the show cause notice, confirming the demand only up to the proposed sum. The benefit of the Notification was to be applied to the balance amount after considering the initial clearances.

4. Regarding the appellants' appeal, the Tribunal referred to previous decisions where it was established that the benefit of the Notification was not available for clearances exceeding a certain value. Once an assessee opts out of the exemption, subsequent availment is not permitted, requiring duty payment on all clearances during the financial year.

5. The appellants sought Modvat Credit for duty paid on inputs used in manufacturing the goods. The Tribunal agreed that Modvat Credit should be allowed, directing authorities to re-quantify the demand after adjusting the credit. Both the Revenue and the appellants' appeals were rejected with instructions to consider Modvat Credit in the demand re-quantification process.