1998 (6) TMI 297 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for concessional rate of Central Excise Duty under Notification No. 193/86-C.E.
2. Interpretation of conditions for availing the benefit of the concessional rate of duty.
3. Reversal of Modvat credit and its impact on availing exemptions.
4. Classification of final product under the Central Excise Tariff.

Analysis:

1. Eligibility for Concessional Rate of Central Excise Duty:
In the appeal by M/s. Nestle India Ltd., the main issue was whether they were eligible for the benefit of a concessional rate of Central Excise Duty under Notification No. 193/86-C.E. The appellants were manufacturing Instant Soluble Coffee Chicory Blends using imported coffee for which they paid duty but did not utilize the credit. The benefit was subject to certain conditions, including not availing credit under Rule 57A of the Central Excise Rules, 1944.

2. Interpretation of Conditions for Availing Benefit:
The authorities had denied the benefit, considering the credit taken in the Modvat register as availed of, even though the appellants had not utilized it. The Tribunal clarified that the benefit was available when the final product was classified under sub-heading No. 2101.10 of the Central Excise Tariff. Referring to a Supreme Court decision, it was highlighted that reversal of Modvat credit was permissible for availing exemptions.

3. Reversal of Modvat Credit and Impact on Exemptions:
The Tribunal concluded that after reversing the Modvat credit, the benefit of the concessional rate of duty should not be denied for quantities where the duty paid input was used. The appellants' commitment to reversing the credit from the Modvat register was considered, and it was emphasized that the benefit was available when the final products were classifiable under the specific sub-heading.

4. Classification of Final Product under Central Excise Tariff:
The Tribunal noted that previous orders had classified the final product under sub-heading 2101.10 of the Central Excise Tariff, making it eligible for the concessional rate of duty under the notification. It was clarified that the benefit should be allowed after the reversal of Modvat credit, and the Asstt. Collector of Central Excise was directed to verify and grant the benefit accordingly.

In conclusion, the appeal was allowed, emphasizing the importance of meeting the conditions for availing the concessional rate of Central Excise Duty and the significance of correctly classifying the final product under the Central Excise Tariff for eligibility for exemptions.