1989 (5) TMI 167 - AT - Central Excise

Summary

Issues Involved:
1. Entitlement to exemption under Notification No. 175/86 based on aggregate value of clearances.
2. Entitlement of Kharia unit to duty exemption despite Kanpur unit availing MODVAT credit.
3. Liability to penalty under Central Excise Rule 173Q.
4. Confirmation of demand for duty under Rule 9(2) of the Central Excise Rules read with Section 11A of the Central Excises and Salt Act.

Summary:

1. Entitlement to Exemption Based on Aggregate Value of Clearances:
The Collector noted that the appellants did not dispute the issue of whether entitlement to exemption under Notification No. 175/86 would depend on the aggregate value of clearances of all excisable goods from both the Kanpur and Kharia units.

2. Entitlement of Kharia Unit to Duty Exemption Despite Kanpur Unit Availing MODVAT Credit:
The appellants contended that the two units were distinct and separate, and the fact that the Kanpur unit availed itself of MODVAT credit should not affect the Kharia unit's entitlement to full duty exemption on its first clearances up to Rs. 15 lakhs. The Collector, however, held that the Kharia unit was not entitled to the said full duty exemption based on clause (a)(i) of para 1 of the Notification, as the manufacturer had availed itself of MODVAT credit in respect of its Kanpur unit.

3. Liability to Penalty Under Central Excise Rule 173Q:
The Collector held that the appellants had rendered themselves liable to penalty under Central Excise Rule 173Q for suppressing the value of clearances of the Kanpur unit in their classification list. However, noting that the appellants had voluntarily deposited a major part of the duty and that the omission was due to an erroneous interpretation of the notification, the Collector did not impose any penalty but cautioned them to be more careful in the future.

4. Confirmation of Demand for Duty:
The Collector confirmed the demand for duty in the sum of Rs. 11,17,124.80 from the appellants under Rule 9(2) of the Central Excise Rules read with Section 11A of the Central Excises and Salt Act, giving due credit for the amount already deposited by them voluntarily.

Appeal and Tribunal's Decision:
In the present appeal, the appellants sought relief only in respect of the demand for duty amounting to Rs. 1,93,354.60 on the basis that the Kharia unit was not entitled to full duty exemption on cement cleared in 1987-88 up to a value of Rs. 15 lakhs since the Kanpur unit had availed itself of the MODVAT credit facility. The Tribunal, after considering the submissions and perusing the record, held that the notification made a clear distinction between manufacturers and factories, and the extent of exemption was based on whether the manufacturer availed himself of the MODVAT credit facility. The Tribunal concluded that the construction sought by the appellants was not tenable and confirmed the Collector's order denying the benefit of full duty exemption to the Kharia unit. The appeal was dismissed.