Tribunal Grants Dual Benefits Under Small Scale Exemption 1/93 & Modvat Credit

The Tribunal allowed the appeals, holding that the appellants were entitled to avail the benefit of small scale exemption 1/93 and the Modvat credit facility simultaneously. The Tribunal found that duty paid clearances made by the appellants did not have to be added for the computation of the exemption slab as per Notification No. 1/93-C.E., dated 28-2-93. Despite Larger Bench decisions against the appellants, the Tribunal relied on earlier favorable decisions upheld by the Supreme Court and consistent Tribunal rulings in favor of the assessee. The Tribunal granted consequential relief to the appellants, setting aside the impugned orders.

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Issues:
- Whether the appellants were entitled to avail the benefit of small scale exemption 1/93 and the Modvat credit facility simultaneously in respect of the same goodsRs.
- Whether the duty paid clearances made by the appellants have to be added for the computation of exemption slab in terms of Notification No. 1/93-C.E., dated 28-2-93Rs.

Analysis:

Issue 1:
The Tribunal considered the first issue regarding the entitlement of the appellants to avail the benefit of small scale exemption 1/93 and the Modvat credit facility simultaneously. The appellant's advocate argued that despite a Larger Bench decision being against the appellants, the Tribunal had been following the ratio laid down in a previous case upheld by the Supreme Court. Citing the case of M/s. Faridabad Tools Pvt. Ltd., where the appeal filed by the Department was dismissed by the Supreme Court, the advocate contended that the Tribunal had consistently followed the favorable decision. Additionally, the advocate referred to the Tribunal's judgment in the case of Jallo Subsidiary Industries Company (India) Pvt. Ltd. v. C.C.E., New Delhi, to support the appellant's position.

Issue 2:
Regarding the second issue of whether duty paid clearances made by the appellants should be added for the computation of exemption slab as per Notification No. 1/93-C.E., dated 28-2-93, the appellant's counsel pointed out a similar situation where a Larger Bench decision was against the appellants. However, the advocate highlighted that the Tribunal had consistently followed earlier favorable decisions upheld by the Supreme Court despite the Larger Bench decisions. Citing the case of Rama Krishna Engineering Works and the subsequent Tribunal decisions, the appellant's advocate argued for the appeals to be allowed based on the consistent approach of the Tribunal.

The Revenue, represented by the learned JDR, reiterated the reasoning of the authorities below and argued for upholding the impugned orders based on the Larger Bench decisions against the appellants. After considering the submissions from both sides, the Tribunal noted that while the Larger Bench decisions were against the appellants, the appeals filed by the Revenue against earlier Tribunal orders favoring the assessee were dismissed by the Supreme Court. Referring to the doctrine of merger, the Tribunal held that the dismissal of the Revenue's appeals by the Supreme Court implied a seal of approval on the correctness of the earlier decisions in favor of the assessee. Additionally, the Tribunal observed that in subsequent judgments, it consistently ruled in favor of the assessee on both issues. Consequently, the Tribunal set aside the impugned orders and allowed both appeals, providing consequential relief to the appellants.

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