1999 (3) TMI 252 - AT - Central Excise

Summary

Issues:
- Whether Modvat credit under Rule 57A of Central Excise Rules can be availed of simultaneously along with the clearance of goods without payment of duty.

Analysis:

The appeal filed by M/s. Jaina Detergent (P) Ltd. raised the issue of whether Modvat credit under Rule 57A of Central Excise Rules can be availed simultaneously with the clearance of goods without duty payment. The appellants manufactured detergent cakes under their brand name and under a different brand name of another person on a job work basis. They availed the benefit of Notification No. 1/93 for detergent cakes manufactured under their brand name. However, a dispute arose when they filed a declaration for Modvat credit for detergent cakes affixed with another person's brand name, while continuing to clear detergent cakes with their own brand name at nil duty rate under Notification 1/93. The Addl. Collector demanded duty for the clearance of detergent cakes with the appellants' brand name, which was confirmed by the Collector (Appeals). The issue centered on the simultaneous availment of exemptions under Notification 1/93 for two different types of detergent cakes - one with the appellants' brand name and the other with another person's brand name.

The appellant's counsel argued that the benefit of Notification 1/93 was not available for goods affixed with another person's brand name, as those goods were not specified under the notification. They contended that they were manufacturing two distinct goods - one eligible for the notification's benefit and the other not covered by it. The Tribunal's previous decisions, including the Faridabad Tools case, supported the simultaneous availment of Modvat credit and nil duty rate clearance. On the other hand, the Departmental Representative relied on a Trade Notice stating that simultaneous availment of Modvat credit and full exemption under the Small Scale Exemption Scheme was not permissible. The Department also highlighted a delay in filing the Modvat claim under Rule 57H and the subsequent reversal of duty on Acid Slurry used in manufacturing detergent cakes at nil duty rate.

After considering both arguments, the Tribunal found that the appellants were entitled to avail Modvat credit at nil duty rate simultaneously for two different types of detergent cakes - one with their brand name covered by Notification 1/93 and the other with a different brand name not eligible for the exemption. The Tribunal held that the appellants did not breach the notification by availing of Modvat credit for goods not specified under it. Therefore, the appeal was allowed, overturning the Collector (Appeals)' decision to demand duty for detergent cakes affixed with the appellants' brand name.