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3. It has also been held by the Tribunal in Bansal Auto case that there is nothing in the MODVAT Rules which says that if an exemption is available to the manufacturer by way of an exemption notification, then he is ousted from the purview of MODVAT Scheme." Reliance has also been placed on he decision in SAIL v. CCE, 2001 (129) ELT 636 (T) and CCE v. VIP Industries, 1998 (103) ELT 95 (T).

4. On the other hand Shri O.P Arora, learned SDR, submitted that the lay flat tubings manufactured by the Appellants are exempted from whole of the duty unconditionally under Notification No.5/98-CE, dated 2.6.98 (Srl. No.71); that Rule 57C of the Central Excise Rules, 1944 clearly mentions that no credit of the duty shall be allowed on such quantity of inputs as is used in the manufacture of final products which are exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty." He thus contended that provisions of Modvat Rules clearly bars the availment of Modvat Credit when the final product is exempted from payment of duty; that Rule 57C refers to a product which is exempt from payment of duty and does not mention of an option to the manufacturer to ignore the exemption from payment of duty provided by the Notification. He, further, submitted that duty of excise is levied and collected in such manner as may be prescribed as per Section 3 of the Central Excise Act, on all excisable goods which are produced or manufactured in India as, and at the rates, set forth in the Schedule to the Central Excise Tariff Act; that Section 5A empowers Central Government to exempt excisable goods from the whole or any part of the duty of excise; that as per Section 38 of the Central Excise Act, every Notification issued under Section 5A shall be laid before each House of parliament which has powers either to make amendments or annul it or leave it as it is; that thus exemption Notification has the approval of the Parliament and as such has to be followed as such. He relied upon the judgment of the Supreme Court in the case of CCE v. Parle Exports (P) ltd., 1988 (38) ELT 741 (SC) wherein the Apex Court has held that the Notification issued under Central Excise Rules should be read along with the Act and when a Notification is issued in accordance with the powers conferred by the Statute, it has statutory force and validity and therefore, the exemption under Notification is as if it were contained in the Act itself. Reliance has also been placed on the decision in the case of Orient Weaving Mills (P) Ltd. v. U.O.I., 1978 ELT J 31 (SC) and Orient Paper Mills Ltd. v. Deputy Director of Inspection, Customs & Central Excise, 1982 ELT 247 (Del.).

"Can it be legitimately said that for the purpose of income tax credit certificate I should look only at the Tariff Schedule and then a blind eye to the notification?"

6.1 We have considered the submissions of both the sides. The submissions made by the learned SDR are well founded. The Constitution of India (Article 265) clearly mandates that no tax shall be levied or collected except by authority of law. The Supreme Court in the case of subba Rao v. State of Andhra Pradesh, AIR 1965 SC 1773 has held that the words 'levy and collection' are used in this Article in a comprehensive sense and are intended to include the entire process of taxation and commencing from taxing statute to the taking away of money from the pocket of the citizen. What the Article enjoins is that every stage in this entire process must be authorized by the law. Section 3 of the Central Excise Act also mentions of levy and collection of duty of excise as, and at the rates, set forth the Schedule to the Central Excise Tariff Act. Further Section 5A of the Act provides that if the Central Government is satisfied that it is necessary in the public interest so to do, may, by notification exempt excisable goods from the whole or any part of the duty of excise leviable thereon. Thus the duty of excise is to be levied and collected as per the rates set forth in the Schedule read with the Exemption Notification. Otherwise the levy and collection shall be without authority of law. The Supreme Court has held in Parle Exports (P) Ltd. as under:-

8. The Appellants have relied upon mainly on the decision in the case of Bansal Auto Parts in which the decision of the Supreme Court in the case of Parle Export Ltd. and Orient Weaving Mills as well as the decision of the Delhi High Court in the case of Orient Paper Mills have not been considered while holding the view that the Department cannot press upon an assessee to choose the option of exemption and ignore the option of Modvat Credit. It is not the case of choosing one option and ignoring the other one duty has to be discharged by an assessee as per the rates set out in the Central Excise Schedule read with Notification issued under Section 5A of the Central Excise Act. If any duty of excise is payable on the final product manufactured by an assessee he is eligible to avail of Modvat Credit of the duty paid on inputs. If the final product is exempted from payment of whole of the duty or is chargeable to nil rate of duty the assessee is not eligible to avail of the Modvat Credit. All the provisions of law have to be read harmoniously. It is not open to an assessee to go against the provisions of the law for the purpose of availing the Modvat Credit. In other decisions relied upon by the Appellants we find that the decisions of the Supreme Court and the Delhi High Court to the effect that notification is to be treated as it is contained in the Act itself have not been considered. We, therefore, hold that the Appellants were not eligible to discharge the duty on lay flat tubings which were exempted from payment of duty unconditionally under the exemption notification and avail of Modvat Credit. We, therefore, uphold the disallowance of Modvat Credit to them. However, as the issue involved is one of interpretation and there were decisions to the contrary no penalty is imposable on the Appellants which is set aside.