Dispute over deemed credit benefit after exemption limit exceeded referred to High Court for resolution.

The case involved a dispute over the entitlement to deemed credit benefit under Notification No. 1/93-C.E. after exceeding the exemption limit of Rs. 75 lakhs. The Tribunal referred the matter to the Punjab & Haryana High Court due to conflicting interpretations within the Tribunal. The High Court was tasked with providing an authoritative interpretation of the relevant words in the notification to resolve the issue of whether the deemed Modvat credit was available after crossing the exemption limit. The outcome emphasized the importance of consistent interpretation for uniform application of tax provisions.

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Issues: Whether a question of law arose for reference on the admissibility of deemed Modvat credit to a unit which had crossed the clearance limit under Notification No. 1/93-C.E.

Analysis: The words "availing of the exemption under Notification No. 1/93-C.E." were capable of two possible interpretations. One view treated the benefit of deemed credit as available even after the assessee crossed the exemption threshold and began paying duty at full rate, while the other view confined the benefit only to units actually availing the exemption. In view of the conflicting Tribunal decisions and the Larger Bench view, the issue was not free from doubt and required authoritative interpretation.

Conclusion: A question of law did arise and the reference application was allowed.

Ratio Decidendi: Where the statutory words are reasonably capable of more than one interpretation and conflicting views exist, a question of law arises for reference to the higher court.

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