1999 (5) TMI 420 - AT - Central Excise

Summary

Issues Involved:
Whether duty of Central Excise can be demanded at the tariff rate from an S.S.I. unit clearing goods at concessional rate without availing Modvat credit under Rule 57A of Central Excise Rules.

Detailed Analysis:
The Appellate Tribunal considered the issue of whether duty of Central Excise can be demanded at the tariff rate from an S.S.I. unit that cleared goods at a concessional rate without availing the benefit of Modvat credit under Rule 57A of the Central Excise Rules. The Tribunal noted that the Respondents paid duty at a concessional rate while clearing goods under Heading 48.19 of the Schedule to the Central Excise Tariff Act without utilizing the Modvat Credit scheme. Consequently, demands were made for payment of duty at the full rate. The Assistant Collector confirmed the duty demand and imposed a penalty, arguing that by not availing the Modvat Credit facility, the Respondents extended higher notional credit to their customers, causing a revenue loss to the Government. However, the Respondents contended that they were eligible for clearance of goods without payment of duty under Notification 175/86 as an S.S.I. unit. They cited relevant legal decisions to support their position. The Tribunal agreed with the Respondents, stating that if they did not opt for the Modvat scheme under Rule 57A, they were entitled to clear goods without duty payment up to the prescribed limit under the notification. The Tribunal emphasized that the notification allowed the option to avail the Modvat facility, and the mere filing of a declaration for Modvat credit did not negate the benefit of the notification. Additionally, the Tribunal highlighted Rule 57E in the Central Excise Rules, which empowered the department to vary the Modvat credit availed by the manufacturer. Consequently, the Tribunal rejected all appeals filed by the Revenue, upholding the impugned order that favored the Respondents.

This detailed analysis of the judgment showcases the Tribunal's thorough consideration of the legal issues surrounding the demand for Central Excise duty at the tariff rate from an S.S.I. unit that cleared goods at a concessional rate without utilizing the Modvat credit scheme. The Tribunal's decision, based on legal precedents and statutory provisions, provides clarity on the eligibility of manufacturers to avail benefits under specific notifications and rules, emphasizing the importance of understanding the nuances of excise duty regulations and the options available to manufacturers in such scenarios.