1999 (6) TMI 105 - AT - Central Excise

Assessee entitled to benefit from most advantageous exemption notification. Case referred to High Court for clarity.

COLLECTOR OF CENTRAL EXCISE, MEERUT Versus MODI XEROX LTD.

The Tribunal dismissed the appeal, holding that when faced with multiple exemption notifications, the assessee should benefit from the more advantageous ... Reference to High Court Issues:1. Interpretation of duty payment under different notifications for plastic bottles and caps.2. Entitlement to credit of duty paid on inputs for fully exempted products.Analysis:1. The main issue in this case revolves around the correct payment of duty under various notifications for plastic bottles and caps. The question arises whether the party correctly paid duty under Notification Nos. 53/88 and 14/92 when Notification No. 217/86, which granted full exemption to the products, was in force. The Revenue sought clarification on this matter, emphasizing the need for reference to the High Court for a legal opinion.2. The second issue concerns the entitlement of the party to the credit of duty paid on inputs, namely HDPE and polypropylene, when the final products, i.e., bottles and caps, were fully exempted under Notification No. 217/86. The debate focused on whether the party should receive credit for the duty paid on inputs for the exempted final products, leading to a dispute between the Revenue and the party regarding the correct application of the law.3. The learned DR argued that similar issues had been referred to the High Courts in previous cases and requested the application to be allowed for reference to the jurisdictional High Court. However, the opposing counsel contended that the Supreme Court's decision in a previous case established that the assessee is entitled to the benefit of the more beneficial notification when multiple exemptions are applicable. The counsel argued against the need for a reference based on settled legal principles.4. Upon careful consideration of the arguments and the Supreme Court's judgment in the case of IPCL, it was noted that when faced with multiple exemption notifications, the assessee should benefit from the more advantageous one. The Tribunal dismissed the appeal in line with this principle. However, the exact notifications applicable to the assessee were not explicitly mentioned, leading to a need for further clarification and reference to the High Court for a legal opinion.5. Consequently, due to the lack of clarity regarding the specific exemption notifications applicable and the need for a legal interpretation, the Tribunal decided to refer the questions of law to the Hon'ble Allahabad High Court for resolution. The questions referred related to the unit's option to pay duty and avail exemptions under specific notifications and the entitlement to credit for duty paid on inputs for fully exempted products under Notification 217/86.6. Ultimately, the reference application was allowed, and the questions of law were referred to the Hon'ble Allahabad High Court for a comprehensive legal opinion, aiming to resolve the uncertainties surrounding the duty payment and entitlement to credits in the context of multiple exemption notifications.