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Issues: Whether a manufacturer manufacturing more than one specified product under Notification No. 175/86-C.E. can simultaneously avail Modvat credit for one product and full exemption for another product.
Analysis: The governing notification was read in the context of the Modvat scheme and the exemption structure applicable to specified goods cleared from the factory. The decisive question was whether the restriction in the notification operated across all goods manufactured by the assessee merely because Modvat credit was taken in respect of one product, or whether the restriction was confined only to the goods for which such credit was actually availed. Relying on the Tribunal view in Swaraj Paints Industries, the order held that the notification must be applied product-wise and that the bar under the relevant clause is attracted only in relation to the specified goods for which Modvat credit on inputs has been availed. A manufacturer is not denied full exemption for other specified goods merely because credit is taken for a different product.
Conclusion: The simultaneous availment of Modvat credit for one product and full exemption for another product was held permissible, and the Departmental appeal was rejected.
Ratio Decidendi: The restriction in Notification No. 175/86-C.E. applies only to the specified goods for which Modvat credit is actually taken, and does not disqualify full exemption for other specified goods manufactured by the same assessee.
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