Strict construction of exemption notification led to denial where Modvat credit was availed on inputs used for aluminum circles.

Exemption under Notification No. 180/88-CE, as amended, was conditional on non-availment of Modvat credit on inputs used to manufacture aluminum circles cleared for use in utensils. The authorities and the Tribunal found on the evidence that the appellants had in fact availed Modvat credit on those inputs. Because no material showed compliance with the exemption condition, the notification was construed strictly and applied only when eligibility requirements were satisfied. The exemption was therefore denied and the denial of benefit was upheld.

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Issues: Whether the appellants were entitled to exemption under Notification No. 180/88-CE dated 13.05.1988 as amended by Notification No. 135/94-CE dated 27.10.1994 despite having availed Modvat credit on inputs used in the manufacture of aluminum circles.

Analysis: The exemption was conditional upon non-availment of Modvat credit on the inputs used in the manufacture of aluminum circles cleared for intended use in the manufacture of utensils. The authorities below and the Tribunal concurrently found, on the evidence, that the appellants had availed Modvat credit in respect of those inputs. In the absence of material showing compliance with the condition attached to the exemption, the notification had to be construed strictly and applied only when the eligibility requirements were satisfied.

Conclusion: The appellants were not entitled to the exemption, and the denial of the benefit was upheld.

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