1990 (11) TMI 240 - AT - Central Excise

Summary

Issues:
Classification of goods for Central Excise duty under Notification No. 132/86; Denial of concessional rate due to availing Modvat credit; Interpretation of Notification No. 132/86 in comparison to other notifications; Relevance of Central Excise Rule 57F(1)(ii) in determining duty-paid inputs.

Classification of Goods and Denial of Concessional Rate:
The case involved the classification of "Metrosyl DM Silicone Fluid" for Central Excise duty under sub-heading No. 3910.00 of the Schedule to the Central Excise Tariff Act, 1985. The appellants claimed the product to be classifiable under this sub-heading, attracting a concessional rate of 35% ad valorem under Notification No. 132/86. The issue arose when the Asstt. Collector denied the concessional rate, stating that the appellants had availed Modvat credit on the duty paid on imported Chlorosilanes, thereby disqualifying it as duty-paid Chlorosilane for the notification's purpose. The Collector (Appeals) upheld this decision, leading to the appeal.

Interpretation of Notification No. 132/86:
The appellants argued that the denial of the concessional rate was erroneous as Notification No. 132/86 did not contain any prohibition or restriction similar to other notifications like Nos. 54/88 and 178/88. They cited a Madras High Court judgment emphasizing that exemptions should not be restricted beyond the language of the notification. The Tribunal agreed, stating that in interpreting laws, there is no room for intendment. The absence of specific restrictions in No. 132/86 meant that such limitations could not be imposed. The Tribunal emphasized that the Modvat Scheme was designed to alleviate the cascading effect of excise duty and that the rationale behind restrictions in other notifications did not apply to the present case.

Relevance of Central Excise Rule 57F(1)(ii):
The Revenue argued that Rule 57F(1)(ii) indicated that inputs for which duty credit had been taken ceased to be duty-paid inputs, justifying the denial of the concessional rate. However, the Tribunal disagreed, stating that the absence of a prohibition in No. 132/86 meant that such inputs did not lose their duty-paid character for the notification's purpose. The Tribunal highlighted that the Modvat Scheme aimed to allow credit on duty-paid inputs for the duty leviable on finished products, which was not applicable in cases of products wholly exempt from duty.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, emphasizing that the absence of specific restrictions in Notification No. 132/86 meant that the denial of the concessional rate based on Modvat credit was unfounded. The judgment clarified the interpretation of the notification in comparison to other notifications and the relevance of Central Excise Rule 57F(1)(ii) in determining duty-paid inputs for the purpose of concessional rates.