Customs, Excise and Gold Tribunal - Delhi
Kinjal Electricals Pvt. Ltd. vs Commissioner Of C. Ex. on 13 February, 2004
Equivalent citations: 2004(95)ECC35, 2004(165)ELT300(TRI-DEL)
ORDER
Justice K.K. Usha, President
1. The issue placed for consideration by the Larger Bench is whether an assessee can exercise option not to avail exemption contained under Notification No. 8/99, dated 28-2-99 and pay normal rate of duty on some of the specified goods and claim the benefit of the notification in respect of other specified goods cleared by it.
2. The appellant is manufacturing nine different electrical goods. In their classification declaration effective from 1-4-99 they opted for the benefit of Notification No. 8/99 in respect of four different goods and in relation to remaining five goods they preferred to pay duty at Tariff rate and availed Modvat credit of duty paid on inputs used in or in relation to the manufacture of said five items. The Commissioner (Appeals) took the view that the appellant being SSI unit had to opt Notification No. 8/99 for exemption under value based clearance of all their final products as per Para (i) of the notification or pay normal rate of duty on all goods cleared by them as per Para (ii) and avail of Modvat in respect of all inputs used in or in relation to manufacture of all final products. The appellant could also have exercised option as per Para (1) of Notification No. 9/99-C.E., dated 28-2-1999 to avail Modvat credit and clear the goods at a concessional rate of duty at 60% or 80%. According to the Commissioner (Appeals) neither Notification No. 8/99-C.E. or 9/99-C.E., dated 29-2-99 permitted the assessee to split the items of specified goods produced by it to be cleared under value based clearance exemption limit and some of items of specified goods on payment of normal rate of duty with Modvat credit benefit. Aggrieved by the above, assessee filed the present appeal.
3. When the matter came up for hearing before a Bench of Two Members the assessee placed reliance on the decision of this Tribunal in Kamrup Industrial Gases Ltd. v. CCE, Allahabad - 2000 (117) E.L.T. 734 (T) where it has been held that it is open to the assessee to avail exemption in respect of some of the products and not to claim such exemption in respect of its other items. The Bench prima facie felt that it could not agree with the view taken in Kamrup Industrial Gases Ltd. and therefore, the matter was referred for consideration of a Larger Bench. The appeal has thus come up for hearing before the Larger Bench.
4. The relevant portion of Notification 8/99, dated 28-2-1999 reads as follows :-
"In exercise of the powers conferred by Sub-section (1) of Section 5A of the Central Excise Act, 1944 (1 of 1944) and read with Clause 119, Clause 121 and Clause 134 of the Finance Bill, 1999, which clauses have, by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), the force of law, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts clearances, specified in column (2) of the Table below, (hereinafter referred to as the said Table) for home consumption, of excisable goods of the description specified in the Annexure appended to this notification (hereinafter referred to as the specified goods), from so much of the aggregate of -
(a) the duty of excise specified thereon in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); and
(b) the special duty of excise specified thereon in the Second Schedule to the said Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (3) of the said Table.
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2. The exemption contained in this notification shall apply only subject to the following conditions, namely :-
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(ii) a manufacturer has the option to not avail the exemption contained in this notification and instead pay the normal rate of duty on the goods cleared by him. Such option shall be exercised before effecting his first clearances at the normal rate of duty. Such option shall not be withdrawn during the remaining part of the financial year."
It is contended on behalf of the appellant that the language of Clause 2(ii) could not in any way, show that the assessee cannot restrict its option to some of the specified items cleared by it. It is contended that consistently this Tribunal has been taking a similar view while considering the earlier notifications. Reliance was placed on the following decisions :-
(1) Abilash Rubber Products v. CCE - 1991 (56) E.L.T. 168 (T) (2) Faridabad Tools Pvt. Ltd. v. CCE - 1993 (63) E.L.T. 759 (T) Affirmed by Supreme Court in 1996 (82) E.L.T. A149 (3) Jallo Subsidiary Industries Company (India) Pvt. Ltd. v. CCE, N. Delhi - 1998 (26) RLT 556 (CEGAT) (4) Kamrup Industrial Gases Ltd. v. CCE, Mumbai-II - 2000 (117) E.L.T. 734 (5) Jaina Detergent (P) Ltd. v. CCE, Allahabad - 1999 (113) E.L.T. 613. (6) CCE, Nagpur v. Vidharbha Beverages - Final Order No. 857/98-B Affirmed by Supreme Court in 2001 (133) E.L.T. A172 (7) Dum Dum Metalloy Industries Pvt. Ltd. v. CCE, Calcutta III - 2001 (134) E.L.T. 171 (Tri. - Kolkata)
4. The learned DR, on the other, contended that the ratio of the decision in Faridabad Tools Pvt. Ltd. will not be of any help to the appellant herein. In the present case the appellant is wanting to work partly inside the notification and partly outside the same unlike in Faridabad Tools where under both options the assessee will be within the notification. It is also contended that in the light of provisions contained under Clause 2(iii) the situation in this case has to be treated as different from Faridabad Tools. It was also submitted that the words used in Notification 1/93 considered in Kamrup Industrial Gases are different. In Para 2 of Notification No. 8/99 the term 'goods' used is in general and not specified goods. It is also contended that since two different Notifications 8/99 and 9/99 are issued in deviation from the earlier practice it would also go to show that the option that can be exercised is with reference to all the specified goods cleared by the assessee and not in respect of some of them.
5. It is true that going by the language of Clause 2(ii) of Notification No. 8/99 it is not clear that the option can be exercised in respect of some of the goods cleared by the assessee. But in a series of decisions of this Tribunal starting from Swaraj Paint Industries v. CCE - 1991 (52) E.L.T. 594 considering earlier Notifications using similar language the view taken is that it is not mandatory for the assessee to exercise option in respect of all the goods cleared by it.
6. In Notification No. 175/86 exemption was granted in respect of specified goods. In the case of first clearances of specified goods up to an aggregate value not exceeding rupees thirty lakhs -
(i) in a case where manufacturer avails of the credit of the duty paid on inputs used in the manufacture of specified goods cleared for home consumption under Rule 57A of the said Rules, from so much of the duty of excise leviable thereon which is specified in the said Schedule (read with any relevant notification issued under Sub-rule (1) of Rule 8 of the said Rules and in force for the time being) as is equivalent to an amount calculated at the rate of 10% ad valorem.
(ii) in any other case from the whole of the duty of excise leviable thereon.
Interpreting Clause (a)(i) Tribunal took the view that the benefit is available to individual specified goods, as set out in the notification. Clause (a)(i), therefore, has to be read only in the context of goods for which Modvat credit is availed, and not for other goods. The same view was followed in Abhilash Rubber Products. It was held that so long as it can be shown that the inputs in respect of which Modvat credit is claimed and the finished goods in relation to manufacture of which the same are used, are different from the duty paid inputs which are going into manufacture of different commodities in respect of which benefit of Notification No. 175/96 is claimed, the appellant should be eligible to the benefit of Modvat credit. In Faridabad Tools it again came up for consideration whether the assessee which was manufacturer of raw aluminium castings and dies, can claim benefit of Notification No. 175/86 in respect of dies when they had claimed Modvat benefit in respect of raw aluminium castings. The Tribunal took the view in favour of the assessee. Appeal filed before the Supreme Court by the Revenue was rejected.
7. In Jallo Subsidiary Industries Co. (India) P. Ltd. the issue came up for consideration was whether the assessee was entitled to benefit of Notification No. 175/86 even after it had opted for Modvat in respect of one of their final products. Following Faridabad Tools, the Tribunal again held in favour of the assessee.
8. In Kamrup Industrial Gases Ltd., the Tribunal was considering the provisions contained under Notification No. 1/93-C.E. The appellants therein were manufacturing three products and they were availing the benefit of exemption Notification No. 1/93 during the year 1994-95. The Tribunal held that for the subsequent year it was open for the assessee to pay duty on one of the items to take Modvat credit of duty in respect of that item and continue to claim exemption for the remaining two items. The relevant paragraph of the Notification which came up for consideration reads as follows :-
"Notwithstanding the exemption contained in paragraph 1 of this notification a manufacturer shall have an option for not availing of the benefit of exemption contained in the said paragraph and to pay duty of excise at the rate applicable to the specified goods but for the exemption contained in the said paragraph 1, subject to the condition that such manufacturer shall pay duty at the rate applicable but for aforesaid exemption on all subsequent clearances of specified goods made after availing such option, in a financial year on which such data of option falls."
Following the ratio of Faridabad Tools, the Tribunal took the view that an assessee can claim exemption in respect of some of the products manufactured by it and may not claim the benefit in respect of some other items. The provisions contained under Notification 1/93-C.E. again came up for consideration in Dum Dum Metalloy Industries. Following Kamrup Indusrial Gases Ltd. it was held that there is no bar on the assessee availing exemption in respect of some of the products and not claiming exemption in respect of certain other products.
9. The learned DR pointed out that the Final Order No. 238/99, dated 17-3-99 in CCE, Nagpur v. Universal Drinks Pvt. Ltd. [2003 (158) E.L.T. 576 (T)] following the ratio of the decision in Faridabad Tools in preference to Kamani Food -1995 (75) E.L.T. 202 has been taken in appeal before the Supreme Court and that the Hon'ble Supreme Court has after condoning the delay in filing the appeal admitted the same. But we are also informed that there is no stay of operation of the Tribunal's order granted by the Supreme Court.
10. On detailed examination of the provisions contained in Notifications Nos. 8/99 and 9/99, we do not find much difference in the language from Notification No. 176/85 which came up for consideration in a series of decisions of this Tribunal from Swaraj Paint Industries onwards. We are also not able to make a distinction from Notification No. 1/93 on the basis of the language used in that Notification. The only difference is that during the relevant period there are two Notifications 8/99, which takes into its fold manufacturers not availing Modvat scheme and Notification 9/99 covering assessee's availing Modvat scheme. Therefore, when option is exercised in respect of some of the goods not to claim the benefit of Notification No. 8/99, to that extent the assessee goes out of the notification. We are not able to distinguish the present situation for the above reason as contended by the learned DR from the ratio of the earlier decisions. In the former notifications both categories were covered under the same notification but the effect of the option was the same. From the above discussion it comes out that the similar view taken by the Tribunal from Swaraj Paint Industries onwards has the approval of the Hon'ble Supreme Court in Faridabad Tools. If that be so, no different view can be taken from Kamrup Industrial Gases Ltd.
11. We, therefore, hold that the appellant was entitled to exercise option not to avail exemption contained under Notification No. 8/99 in respect of five of its products while claiming the benefit in respect of four other items. The order impugned is, therefore, set aside and the appeal stands allowed.