1994 (6) TMI 65 - AT - Central Excise

Summary

Issues:
1. Eligibility for exemption under Notification No. 175/86 after opting out of Modvat Scheme.

Analysis:
The case involved an appeal against an order passed by the Collector of Central Excise, Chandigarh, regarding the eligibility of the appellants for exemption under Notification No. 175/86 after opting out of the Modvat Scheme. The appellants, engaged in manufacturing rubber products, had initially filed a Classification List claiming exemption and later opted out of the Modvat Scheme. The Assistant Collector rejected their claim for refund of duty, stating they were not entitled to opt out of the Modvat Scheme before the end of the financial year. The Collector (Appeals) upheld this decision.

The main issue before the Tribunal was whether the appellants could opt out of the Modvat Scheme and still be eligible for the exemption under Notification No. 175/86. The appellants argued that since they had opted out before the approval of the initial Classification List and reversed the credit availed, they should be eligible for the exemption. They cited relevant case law to support their contention.

On the other hand, the respondents argued that despite the credit reversal, the appellants would be deemed to have availed the credit, making it impermissible for them to opt out of the Modvat Scheme retrospectively. They contended that no refund of duty could be claimed for goods cleared before opting out of the scheme.

The Tribunal examined the records and considered both sides' submissions. Referring to a previous case, it was established that there was no restriction in the Rules preventing a manufacturer from opting out of the Modvat Scheme during the financial year to avail of the exemption under Notification No. 175/86. As long as the clearances under Modvat were included in determining the aggregate value, opting out was permissible for full exemption up to the prescribed limits under the notification.

Based on the precedent and the interpretation of the rules, the Tribunal allowed the appeal, stating that the appellants were indeed eligible for the full exemption under Notification No. 175/86 after opting out of the Modvat Scheme. The appellants were granted consequential relief in line with the Tribunal's findings.