Customs, Excise and Gold Tribunal - Delhi
Jai Industries vs Collector Of Central Excise on 19 August, 1993
Equivalent citations: 1994(45)ECC175, 1994ECR458(TRI.-DELHI), 1993(68)ELT475(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The eligibility of the appellants to the benefit of exemption in terms of clause a(i) of Notification No. 175/86 dated 1-3-1986 is the common issue for determination in all the above 19 appeals which are heard together and disposed of by this common order.
2. The appellants who are registered SSI Units, engaged inter alia in the manufacture of auto parts, solenoid valves, etc. were availing of the benefit of Notification 175/86 as amended. They filed requisite declarations under Rule 57G of the Central Excise Rules, 1944 to avail of modvat credit under Rule 57A and started to pay Central Excise duty at the rate of 10% BED = 5% SED on BED under the notification. As per Notification 175/86, a manufacturer may start to pay duty at concessional rate (normal rate minus 10% ad valorem subject to minimum of 5% ad valorem) on the first clearances of value upto Rs. 75 lakhs, if he avails credit of duty paid on specified inputs to be used in the manufacture of specified final products under Rule 57A. If modvat credit is not availed, goods upto the value of Rs. 20/30 lakhs can be cleared at nil rate of duty. As the appellants neither availed of modvat credit nor availed of total exemption, but cleared goods at concessional rate of duty i.e. 20% - 10% = 10% + 5% SED, demand show cause notices were issued for alleged violation of the provisions of Notification 175/86. The additional allegation in the case of Rotex Manufacturers and Engg. (Guj.) P. Ltd. (A. No. E/862-863/92-B1) is that the assessee had intentionally and purposely removed excisable goods at concessional rate of duty on first clearance value of Rs. 15 lakhs though not admissible for not availing modvat facility as per para a(i) of Notification 175/86 so as to afford their buyers to take higher credit of duty as per Rule 57B of Central Excise Rules, 1944 read with para 5 of Notification 175/86 dated 1-3-1986 as amended. The demands were confirmed by the authorities below, hence these appeals.
3. We have head Shri Ajay Jain, Shri Willingdon Christian, Shri H.S. Mew, Smt. Archana Wadhwa, and Shri K.K. Anand learned Advocates for the appellants and Shri B.K. Singh, learned SDR and Shri S.K. Sharma, JDR for the Department and carefully considered their submissions.
4. We see force in the contention of the appellants that there is nothing in Notification 175/86 which makes it obligatory to avail of the benefit of modvat credit even if a declaration has been filed to that effect. The mere fact that the appellants paid duty at the concessional rate of 10% does not mean that they would be disentitled to the benefit of para a(ii) of the notification. Mere filing of the declaration under Rule 57G cannot take away a benefit otherwise admissible under the notification which prescribes only two rates (i) concessional rate of duty of 10% or (ii) nil rate and para (a)(ii) does not exclude para (a)(i). The appellants are otherwise eligible to the benefit of notification as they are SSI units whose clearance value did not exceed the prescribed limit in the preceding financial year and their products were specified in the Table appended to the notification and hence, all the conditions for applicability of the notification have been fulfilled by the appellants. Nowhere in the notification is it provided that if the manufacturer paid excess duty, the benefit of the notification would be denied. The nature of the notification is such that it is the option of the appellants either to avail of the benefit of modvat facility or not and the mere fact that the appellants filed the declaration to avail of modvat facility while they actually did not avail it, cannot stand in the way of extension of the benefit of the notification to them. In any event, the appellants cannot be burdened with higher or greater liability. We do not accept the contention of the learned DR that Clauses (i) and (ii) of para (a) are mutually exclusive as there is nothing in the notification itself which indicates exclusion of one from the other. We also do not agree with his contention that the provisions of the notification have been contravened by clearance of goods at concessional rate of duty. His argument regarding para 5 of Notification 175/86 in respect of higher notional credit being availed of by any buyer as per Rule 573 read with para 5 has been raised in the appeals before us for the first time and, therefore, cannot be permitted. We further note that there is no requirement in para 5 that a manufacturer should pay concessional rate of duty only after availing modvat credit.
5. In so far as appeals of M/s. Rotex Manufacturers and Engg. (Guj.) P. Ltd. (E/862 & 863/92-B1 are concerned the additional argument of Shri Wil-lingdon is that during the relevant period, no declaration under Rule 57G was filed as the appellants were not availing modvat credit and, therefore, no question of suppression or misdedaration arises and the RT 12 returns filed clearly show that the appellants have not taken modvat credit. The learned DR submits that as the appellants went on paying concessional rate of duty wilfully without availing of modvat credit with intent to misutilise modvat scheme. This action on their part amounts to suppression and the extended period of limitation is accordingly available to the Department. We find that the allegation that M/s. Rotex Manufacturers and Engg. (Guj.) P. Ltd. had intentionally removed excisable goods at concessional rate of duty though not otherwise admissible as per para (a)(i) in order to afford their buyers the opportunity of availing of higher credit of duty, remains in the realm of conjecture in the absence of any finding in the impugned orders that any buyer actually availed of higher credit as per Rule 57B read with para 5 of Notification 175/86 and, therefore, the allegation remains unsubstantiated. In view of our decision on the merits of the matters, we see no need to record any finding on limitation in the above appeals of M/s. Rotex Manufacturers and Engg. (Guj.) P. Ltd.
6. In the light of the above discussion we hold that the appellants are eligible to the benefit of exemption in terms of Clause a(ii) of Notification 175/86 dated 1-3-1986. As a result we set aside the duty demand and penalty in all the cases and allow the appeals with consequential relief if any due to the appellants, and respondents in the case of CCE, Pune v. Unique Enterprises (Appeal No. E/176/92) and the cross objection (No. E/Cross/438/92-B1 in E/176/92-B1) abates.