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Issues: Whether deemed credit under Ministry's Order No. TS/36/94-TRU dated 1-3-94 could be availed by a unit even after it crossed the clearance limit under Notification No. 1/93-C.E. dated 28-2-93 and began paying duty at the normal rate.
Analysis: The deemed credit order was issued under Rule 57G(2) of the Central Excise Rules and extended credit only to re-rollers availing the exemption under Notification No. 1/93-C.E. The order treated specified inputs in stock as duty-paid and allowed Modvat credit without production of duty-paying documents only while the manufacturer continued to operate under the exemption notification. Once the clearance limit under Notification No. 1/93-C.E. was crossed, the unit no longer remained within the scope of that exemption. The entitlement to deemed credit therefore did not continue after the unit moved out of the exempted regime.
Conclusion: The question was answered in the negative, against the assessee and in favour of the Revenue, and the matter was fit to be referred for the High Court's opinion.
Final Conclusion: Deemed credit under the notified scheme was confined to manufacturers actually availing the exemption under Notification No. 1/93-C.E., and it did not survive after the exemption limit was exceeded.
Ratio Decidendi: A deemed credit benefit tied to an exemption notification ceases once the assessee no longer falls within that exemption.
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