2000 (10) TMI 358 - AT - Central Excise

Summary

Issues:
1. Interpretation of the eligibility for deemed Modvat credit after crossing the limit of Rs. 75 lakhs of aggregate value of clearances.

Analysis:
The case involved a dispute regarding the entitlement to deemed Modvat credit after exceeding the limit of Rs. 75 lakhs of aggregate clearances. The respondents, engaged in manufacturing re-rolled articles of Iron & Steel, were availing concessional duty rates under Notification No. 1/93 and Modvat credit under Rule 57A of the Central Excise Rules. The issue arose when the respondents took deemed Modvat credit after crossing the Rs. 75 lakhs clearance limit. The Dy. Commissioner initially denied them this credit, but the Commissioner (Appeals) reversed this decision, allowing the credit even after the limit. The Revenue appealed to CEGAT, challenging the Commissioner's decision.

The Revenue contended that Ministry's Order No. TS/36/94-TRU specified conditions for deemed Modvat credit eligibility, emphasizing that re-rollers availing exemption under Notification No. 1/93 would only qualify until they reached the Rs. 75 lakhs limit, not beyond. The Revenue sought a reference to the High Court for clarification on this matter.

On the other hand, the respondents argued that the application for reference was not maintainable, citing precedents where detailed findings by the Tribunal led to dismissals of similar appeals. They emphasized that exemption notifications must be interpreted strictly but comprehensively, without narrow construal once the goods meet the exemption criteria.

After considering the submissions, the Tribunal found that Ministry's Order No. TS/36/94-TRU could be subject to two interpretations regarding deemed Modvat credit post the Rs. 75 lakhs limit. Given the ambiguity, the Tribunal held that a point of law indeed arose, allowing the application for reference.

In conclusion, the case highlighted the conflicting interpretations of the eligibility for deemed Modvat credit after surpassing the Rs. 75 lakhs clearance limit. The Tribunal's decision to allow the reference application indicated the need for clarity on this legal issue to ensure consistent application of excise duty rules and notifications.