1997 (4) TMI 283 - AT - Central Excise

Summary

Issues:
1. Whether the appellants had the option to avail of the benefit of exemption or to pay duty on the goods and clear them.
2. Whether the action of M/s. Alok Plastics in paying duty on polyjars and the consequent action of M/s. Brooke Bond in taking credit of duty paid on the inputs used therein is permissible in law.

Analysis:
The judgment by Ms. Jyoti Balasundaram of the Appellate Tribunal CEGAT, New Delhi dealt with two cases arising from a common order-in-appeal passed by the Collector of Central Excise (Appeals), Allahabad. The issue revolved around the appellants availing Modvat credit on inputs for manufacturing Polyjars, which were exempt from duty. The department alleged that the credit was wrongly taken under Rule 57C of the Central Excise Rules, 1944, leading to demands of duty against both appellants, M/s. Alok Plastics and M/s. Brooke Bond India Ltd. The appeals were filed after the demands were confirmed by the adjudicating and lower Appellate authorities.

During the hearing, the main contention was whether M/s. Alok Plastics had the option to pay duty on the polyjars or avail of exemption under Notification 53/88. The appellants argued that since M/s. Alok Plastics paid duty on the polyjars, M/s. Brooke Bond rightfully availed credit on the inputs used. They relied on legal precedents, including the case of M/s. Everest Converters, to support their position. The appellants contended that the Rule did not apply to goods other than the final product, and thus, their actions were legally valid. On the other hand, the department reiterated the findings of the lower authorities.

The core issue for decision in the appeals was whether the assessee had the option to avail exemption or pay duty on the goods. Citing the case of Everest Converters and subsequent legal precedents, the judgment highlighted that the option to claim or not claim the benefit of notification rested with the assessee. The Tribunal's previous rulings emphasized that the assessee could choose to pay duty and claim Modvat credit, as seen in cases involving similar notifications. Following the legal position established in prior judgments, the Tribunal held that M/s. Alok Plastics' action in paying duty on polyjars and claiming Modvat credit on inputs was correct in law. Consequently, the action of M/s. Brooke Bond in availing Modvat credit was also deemed permissible. As a result, the impugned order was set aside, and the appeals were allowed.

In conclusion, the judgment clarified the assessee's option to choose between availing exemption or paying duty, emphasizing that such decisions were within the assessee's discretion. The legal validity of the actions taken by the appellants in paying duty and claiming credit was upheld based on established legal principles and precedents, ultimately leading to the allowance of the appeals.