1998 (12) TMI 264 - AT - Central Excise

Summary

Issues:
1. Availing Modvat credit on aluminium waste and scrap for manufacturing aluminium ingots.
2. Applicability of Notification No. 180/88-C.E. and Notification No. 69/89-C.E.
3. Dispute regarding the option to avail exemption or pay duty.
4. Interpretation of conflicting decisions by the Tribunal.
5. Relief sought by the appellants.

Analysis:
1. The appellants utilized Modvat credit on aluminium waste and scrap for manufacturing aluminium ingots during a specific period. They cleared the ingots by paying concessional duty under Notification No. 69/89-C.E. However, duty was later imposed on them, reversing the Modvat credit, as per Notification No. 180/88-C.E. granting full exemption on such ingots. The issue revolved around whether the appellants had the option to choose between exemptions or paying duty.

2. The advocate for the appellants argued that previous Tribunal decisions had established that assessees had the discretion to avail exemptions or pay dues. He cited cases like Pascal Paramount Pvt. Ltd. and Laxmi Enterprises to support this argument. The advocate emphasized that since Modvat credit was available on scrap and duty was paid on the final product, there was no justification for reversing the credit. Hence, he requested the appeal to be allowed.

3. On the contrary, the Respondent referred to a Trade Notice and court decisions like Sang Fasteners (Pvt.) Ltd. and Indo Nissin Foods Ltd., asserting that when goods are fully exempted from duty, assessees do not have the option to pay duty voluntarily. The Respondent contended that the department must provide the benefit of exemption notifications, and assessees cannot pay more than what is leviable.

4. The Tribunal analyzed the arguments and noted the conflicting interpretations of previous decisions. The key issue was whether the appellants had the choice to avail the exemption or pay duty under different Notifications. Referring to Classic Rugs Pvt. Ltd., the Tribunal concluded that assessees could choose the more beneficial option when faced with multiple applicable notifications. Since Notification No. 69/89-C.E. applied to the appellants and the Revenue did not contest this, the appeal was allowed, setting aside the duty imposition and providing consequential relief to the appellants.