MODVAT credit and small scale exemption: concessional duty under Notification No. 175/86 cannot be denied absent express prohibition.

A small scale unit availing the concessional rate under Notification No. 175/86 was not disentitled from that benefit merely because MODVAT credit had been availed or a declaration to that effect had been filed. The Tribunal noted that the notification did not expressly require forfeiture of MODVAT credit as a condition for the concessional rate, and mere payment of duty at the concessional rate did not by itself defeat the benefit under para (a)(ii). The point was treated as covered by the Tribunal's earlier decision in the assessee's own case, following Jai Industries, and the exemption benefit was therefore upheld.

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Issues: Whether a small scale unit availing the concessional rate of duty under Notification No. 175/86 could be denied the benefit of that notification on the ground that MODVAT credit had been availed or declared.

Analysis: The Tribunal held that the controversy was covered by its earlier decision in the appellants' own case, which in turn followed the decision in Jai Industries. It was noted that nothing in Notification No. 175/86 made it obligatory to forgo MODVAT credit merely because a declaration to that effect had been filed, and the mere payment of duty at the concessional rate did not, by itself, disentitle the assessee from the benefit of para (a)(ii) of the notification.

Conclusion: The benefit of Notification No. 175/86 could not be denied on the ground of MODVAT credit availment or declaration, and the appeal was allowed.

Ratio Decidendi: A small scale unit is not disentitled to the exemption or concessional benefit under Notification No. 175/86 merely because MODVAT credit was availed or a declaration regarding such credit was filed, unless the notification expressly so requires.

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