2000 (11) TMI 972 - AT - Central Excise

Tribunal dismisses Revenue's appeal, upholds Modvat credit for recipient manufacturer

The Revenue's appeal against the Commissioner's order was dismissed by the Tribunal. The Tribunal held that the recipient manufacturer could not be denied ... Modvat credit - exemption notification - concessional rate of duty - option to avail exemption - parliamentary willModvat credit - exemption notification - concessional rate of duty - option to avail exemption - Whether a recipient manufacturer is entitled to Modvat credit where the supplier paid concessional duty instead of invoking an exemption notification providing nil duty. - HELD THAT: - The Tribunal accepted the respondent's contention that where two notifications exist - one prescribing a concessional rate of duty and another granting duty-free clearance - the supplier's choice to pay the concessional rate cannot be treated as having elected against the exemption. The Revenue cannot compel the supplier to avail a particular notification; the existence of alternative statutory notifications means the supplier follows the rate it lawfully pays. Consequently, denial of Modvat credit to the recipient on the ground that the supplier did not invoke the nil-duty notification is not justified. The Tribunal relied on the previously stated reasoning that an assessee's choice not to avail an exemption notification does not amount to a prohibited exercise or negation of the legislative scheme, and therefore the downstream recipient cannot be deprived of credit for duty lawfully paid by the supplier.The appeal is dismissed and the respondent is entitled to the Modvat credit.Final Conclusion: The Tribunal dismissed the Revenue's appeal, holding that a supplier's payment of concessional duty (instead of claiming a nil-duty exemption) does not disentitle the recipient manufacturer from claiming Modvat credit. The appeal was filed by the Revenue against the Commissioner's order setting aside the denial of Modvat credit by the Asstt. Commissioner. The respondents availed Modvat credit based on two exemption notifications for duty on certain goods. The Tribunal ruled that the recipient manufacturer cannot be deprived of the credit if the first manufacturer chose not to avail a specific exemption notification. The appeal was dismissed.