2000 (2) TMI 435 - AT - Central Excise

Summary

Issues Involved:
Whether the appellants can opt for exemption from payment of duty under notification No. 1/93 after opting out earlier for payment of duty and availment of Modvat credit.

Analysis:
The appeal was filed by M/s. Randhir Rolling Mills to determine if they could opt for exemption from duty under notification No. 1/93 after initially opting for payment of duty and Modvat credit. The appellants manufactured M.S. Flats and M.S. Bars and Rods and initially availed the facility of Modvat credit and payment of duty at a concessional rate under Notification No. 1/93. Subsequently, they opted for total exemption from duty under the same notification. Both lower authorities upheld the duty demand, stating that once the appellants opted for payment of duty and Modvat credit, they could not opt for total exemption under the notification. The appellants argued that the notification did not restrict opting out from clause a(i) of paragraph 1, making them eligible for total exemption. They cited the case of Brooks Industries v. CCE in support.

Analysis:
The Revenue argued that once the appellants initially availed the benefits of notification No. 1/93 at the start of the financial year, their option to change ceased as it could only be exercised once per year. They contended that paragraph 1 of the notification provided two options, and the appellants had to choose one at the beginning of the financial year. The Revenue highlighted that para 5 was inserted in the notification to restrict opting in and out of Modvat credit during the financial year. They emphasized that the decision in the Brooks Industries case was not applicable as it did not involve paragraph 5, which was crucial in this case.

Analysis:
Upon considering the submissions, it was noted that paragraph 5 of Notification No. 1/93 limited the assessee to one option per financial year. Once the option was exercised, duty had to be paid on all subsequent clearances of goods in that financial year. The appellants had opted to pay duty and avail Modvat credit from a specific date. As they had chosen to pay duty from that date, they were not allowed to opt out of that option and claim exemption under the notification. Since the appellants had opted to pay duty from a certain date, they were bound by that choice for all subsequent clearances within the financial year. The appeal was rejected, finding no error in the lower authorities' decision.