2000 (9) TMI 495 - AT - Central Excise

Summary

Issues:
1. Modvat credit eligibility for yarn sent to job workers.
2. Interpretation of Rule 57A(1) and Notification No. 24/94-C.E. (N.T.).
3. Applicability of deemed Modvat credit under Notification No. 29/96-C.E.
4. Right of assessee to avail Modvat credit on actual basis.
5. Impact of Board's Circular No. 243/77/96-CX.
6. Assessee's option to choose between available benefits.

Analysis:

1. The primary issue in this case pertains to the eligibility of Modvat credit for yarn sent to job workers. The appellant, a composite mill, utilized duty paid yarn in their factory and sent yarn to outside weavers under job work basis. The question was whether the appellant could be denied Modvat credit on actual basis for duties paid on yarn sent to job workers.

2. The Tribunal examined Rule 57A(1) and Notification No. 24/94-C.E. (N.T.) which specified inputs and final products. The appellant availed Modvat credit based on duty paying documents. The Revenue contended that Modvat credit for yarn sent to job workers was available only on a deemed basis under Notification No. 29/96-C.E. (N.T.).

3. Rule 57A(1) allows Modvat credit for duties paid on inputs, and Notification No. 24/94 specified inputs and final products. The Tribunal found that the appellant fulfilled all conditions to avail Modvat credit on actual basis under Rule 57A(1) and was not compelled to opt for deemed Modvat credit under Notification No. 29/96-C.E.

4. The Tribunal emphasized that the appellant's right to avail Modvat credit on actual basis under Rule 57A(1) was not affected by the availability of deemed Modvat credit. The Board's Circular No. 243/77/96-CX did not restrict the appellant from claiming Modvat credit on actual basis, as evidenced by the duty paying documents.

5. It was noted that the Circular acknowledged the eligibility of a composite mill for credit of duty paid on inputs on actual basis. The Tribunal concluded that the appellant had the right to choose the more beneficial provision of law when multiple benefits were available, without any compulsion to opt for the less beneficial option.

6. Ultimately, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The decision was based on the appellant's right to avail Modvat credit on actual basis under Rule 57A(1) and Notification No. 24/94-C.E. (N.T.), rejecting the Revenue's contention regarding deemed Modvat credit. The Tribunal did not address the limitation aspect raised by the appellant due to the appeal being allowed on merits.