Exemption notification interpretation favours assessee where Modvat credit was not taken on covered goods or other factory products.

Condition No. 10 of Notification No. 5/98-C.E. was interpreted as not being breached merely because Modvat credit was taken on inputs used for other products, so long as no credit was availed on the goods covered by the notification or on any other final product manufactured in the same factory. Applying the same factual position as in the assessee's earlier case, the Tribunal found the condition satisfied and allowed the concessional exemption for cellular and household plastic articles. It also reiterated that where notification language is capable of two meanings, the interpretation favourable to the assessee must prevail.

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Issues: Whether the benefit of Sl. No. 69 of Notification No. 5/98-C.E. dated 02.06.1998 was available to the assessee for clearances of cellular articles and household articles of plastics when no credit was availed on those products or on any other final product manufactured in the same factory, in the light of condition No. 10.

Analysis: The applicable exemption required satisfaction of condition No. 10. The Tribunal had already interpreted that condition in the assessee's own case and had held that the bar did not apply merely because Modvat credit was taken on inputs used in relation to other products, so long as credit was not availed on the products covered by the notification or on any other product manufactured in the same factory. In the present case, the same goods were involved, the same factual position prevailed, and the condition was found to be satisfied. The Tribunal also noted that, where the notification language was capable of two meanings, the interpretation favourable to the assessee had to prevail.

Conclusion: The assessee was entitled to the concessional exemption under Sl. No. 69, and the Revenue's challenge to the Commissioner (Appeals)'s order failed.

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