TaxTMI 
TaxTMI 
1997 (7) TMI 338
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to explain as to why the amount of credit of duty taken by the appellants should not be disallowed to them and why the amount equivalent to the credit already utilised should not be recovered from them under Rule 57-I. The appellants submitted that Rule 57C restricts the taking of credit only when the final product was exempt. The appellants also argued that the exemption under Notification No. 1/93 was to the manufacturer as an SSI unit up to the value of Rs. 30 lakh; that this notification did not exempt the goods and was not applicable to all the manufacturers. Thus the notification was conditional and since the notification was conditional, the option was with the assessee either to avail of the exemption accorded under Notification No. 1/93 or pay duty on the final product and take credit of duty paid on the inputs. It was also submitted by the appellants that there are a number of decisions of this Tribunal which clearly held that the option is of the assessee either to avail the exemption under Notification No. 1/93 or to pay duty on the final product and avail the benefit of credit of duty on the inputs under the Modvat scheme. The lower authorities after considering the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l power. It can only reduce rates of duty. Notifications, no doubt has statutory force, drawing their authority from the provisions of a statute. Notification having character of exemption cannot be forced upon an assessee if it does not suit him. If this character of a notification under Section 5AA(1) is ignored, and it is forced upon an assessee, then the power under Section 5A would have been simply a power to fix rates of duty, not exceeding the rate prescribed in the Schedule to the Central Excise Tariff Act, 1985 and perhaps simultaneously, the provisions in the said enactment would have expressed clearly that the rates prescribed are the `ceiling' or `maximum' rates subject to reduction by Central Government. In this connection, difference in language in Section 3(2) of the Central Excises and Salt Act, 1944 and Section 5A(1) is apparent. Section 3(2) gives the peremptory power to the Central Government to fix values in respect of excisable goods and those values replace the value under Section 4. It is neither the option of the assessee nor that of the Department to assess the goods on the basis of the `normal price' under Section 4 of the Act, if tariff values have been f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tute has statutory force and validity and, therefore, the exemption is as if it is contained in the present Act itself. The question for decision in this petition is whether the petitioners are entitled to avail themselves of this exemption, and whether, therefore, the levy was illegal'. We are of the view that these observations were made in a totally different context. In that case, the Apex Court was examining the question whether a certain exemption notification issued by the authorities in the State of Uttar Pradesh under the Sales Tax Act of the State was applicable to certain goods of an assessee when he claimed the exemption. The Apex Court did not rule that the notification will have to be applied even if it was not claimed by an assessee. Nature of the `exempting' power was not under examination by the Court. 5.7 Nature of the power under Rule 8(1) of the Central Excise Rules has been subject matter of some cases, though on different aspects of that power. An exemption notification prescribed a rate of exemption (rebate) higher than the tariff rate of duty levied by the Schedule to the Act. Government of India held in the case of Terna Shetkar [1980 (6) E.L.T. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....shall be allowed if the final product is exempt from whole of duty of excise leviable thereon......' He submits that the wording of Rule 57C does not use the expression that `no Modvat credit shall be allowed who avails of the full exemption of duty on final product.' We are afraid that there is a fallacy in this argument. Once we hold that availment of an exemption notification is an option with an assessee, the expression in Rule 57C `...final product is exempt from whole of duty of excise....' has to be read as `..... final product avails of exemption from whole of duty of excise leviable thereon....', otherwise this will frustrate the basic purpose of the scheme of Modvat credit, i.e. to avoid cascading effect of duty upon duty." 7. These paragraphs of the judgment of this Tribunal bring out that there is an option with the assessee either to avail exemption or to avail the benefit of Modvat credit. We note that the department had relied upon the judgment of Andhra Pradesh High Court in the case of Ganesh Metal Processing Industries - 1996 (81) E.L.T. 11 (A.P.). For the sake of clarity Para 19 and 19(a) of its judgment are reproduced as under :- "19. While on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. When once such a notification or provision is found, there is no scope to take credit of the duty paid on the inputs under Rule 57A and other allied provisions. The embargo laid down by Rule 57C is absolute and categorical. In the face of this clear-cut embargo, it is futile to contend that the assessee have still an option to utilise the credit on the inputs under Rule 57A read with Rule 57C. No statutory order or Notification has been placed before me which, despite the prohibition contained in Rule 57C, enables the assessee to seek shelter under Modvat credit was erroneously allowed to the petitioners even after the Notification No. 202/88 granting exemption from the whole of excise duty payable was issued by the Central Government. Obviously, this was done under a mutual mistake and the course of action adopted by the petitioners and assented to by the department has no sanction of law." 8. We find the issue before the Hon'ble High Court was the Notification No. 202/88 vis-a-vis Rule 57C. We note that the Notification No. 202/88 granted exemption to certain goods. This notification inter alia provided for the the exemption of specified goods described in the table an....