2004 (2) TMI 220 - AT - Central Excise

Summary

Issues:
1. Eligibility for small scale exemption notification under Notification No. 1/93.
2. Validity of classification list change retrospectively.
3. Admissibility of differential duty demand.
4. Applicability of Notification No. 84/93 enhancing exemption limit.

Analysis:

1. Eligibility for small scale exemption notification under Notification No. 1/93:
The appellants, a SSI Unit, initially opted for the benefit of Notification No. 1/93 but later realized they were not eligible as they were not registered as a small scale industry. The Department issued a show cause notice demanding differential duty at the normal tariff rate. The appellants reversed the Modvat credit availed and opted for clause (2) of the Notification. The Tribunal held that once it was established that the appellants were not eligible for the benefit of clause (1)(a)(i) of the Notification, they could avail benefits under clause (2) of the same Notification. The Department's argument that the classification list cannot be changed retrospectively was rejected.

2. Validity of classification list change retrospectively:
The Department contended that the appellants cannot change their classification list retrospectively by filing a revised list in October 1993. However, the Tribunal found no merit in this argument, stating that the appellants were adjusting their classification list based on their eligibility for the small scale exemption notification under the correct clause of the Notification.

3. Admissibility of differential duty demand:
The Department demanded differential duty from the appellants at the normal tariff rate, claiming they were not eligible for the benefit under clause (1)(a)(i) of the Notification. The appellants, upon realizing their ineligibility, reversed the Modvat credit and opted for the correct clause of the Notification. The Tribunal held that the appellants were entitled to the benefit of clause (2) of Notification No. 1/93 and set aside the demand for differential duty.

4. Applicability of Notification No. 84/93 enhancing exemption limit:
Notification No. 84/93 amended Notification No. 1/93, enhancing the exemption limit to Rs. 30 lakh for units not registered as SSI with the Director of Industries. The Tribunal acknowledged this amendment and held that the appellants, upon correcting their classification list, were eligible for the enhanced exemption limit. The Tribunal allowed the appeal, setting aside the earlier order confirming the demand of Central Excise duty against the appellants.