1994 (5) TMI 75 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 175/86 and Rule 57G of Central Excise Rules, 1944 regarding availing full exemption and Modvat facilities simultaneously.
2. Whether a manufacturer availing SSI exemption can also avail Modvat credit facility.
3. Eligibility of M/s. Delhi Kanodia Tin and Drum Factory to avail duty-free clearances under Notification No. 175/86 for Metal Containers and PP Caps.

Analysis:
1. The appeal was filed against the order of the Collector (Appeals) regarding the eligibility of availing full exemption and Modvat facilities simultaneously under Notification No. 175/86 and Rule 57G. The Tribunal referred to a circular clarifying that full exemption and Modvat facility can be availed simultaneously if a separate account is maintained for dutiable and exempted categories. The Tribunal set aside the impugned order and accepted the appeal, emphasizing the importance of maintaining separate accounts for different sub-headings of input materials.

2. The main contention was whether a manufacturer availing SSI exemption can also avail Modvat credit facility. The Department argued that units availing Modvat credit under SSI Scheme are required to pay Central Excise duty as per the notification. The Tribunal analyzed previous decisions and concluded that the respondent was entitled to avail Modvat credit and SSI exemption simultaneously for different sub-headings of manufactured items. It was highlighted that maintaining separate accounts for common raw materials is crucial for availing Modvat credit.

3. M/s. Delhi Kanodia Tin and Drum Factory faced a show cause notice for availing Modvat credit on one item while claiming duty-free clearances under Notification No. 175/86 for other items. The Tribunal considered various precedents and held that the respondent was eligible to avail Modvat credit and exemption for different sub-headings of products. It was emphasized that separate accounts for common raw materials must be maintained to ensure compliance with the requirements. The impugned order was set aside, and the appeal was allowed based on the findings.

In conclusion, the Tribunal clarified the eligibility criteria for availing full exemption, Modvat facilities, and duty-free clearances under specific notifications, emphasizing the importance of maintaining separate accounts for different categories of manufactured items to ensure compliance with the legal provisions.