TaxTMI 
TaxTMI 
2005 (3) TMI 13
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....97 4 4/EA2/Ahd-III/ 05 362/R/03-4 dated 27-1-2004 29 dated 24-6-2003 81,538 5 5/EA-2/Ahd-III/ 05 363/R/03-4 dated 27-1-2004 47 dated 1-8-2003 83,697 6 6/EA2/Ahd-III/ 05 364/R/03-4 dated 27-1-2004 93 dated 6-10-2003 80,314 7 7/EA2/Ahd-III/ 05 365/R/03-4 dated 27-1-2004 29 dated 14-7-2003 1,39,338 8 8/EA2/Ahd-III/ 05 366/R/03-4 dated 27-1-2004 45 dated 27-7-2003 67,187 9 9/EA2/Ahd-III/ 05 367/R/03-4 dated 27-1-2004 91 dated 3-10-2003 74,973 10 10/EA2/Ahd-III/ 05 368/R/03-4 dated 27-1-2004 61 dated 29-8-2003 2,07,963 &....
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....s hold that, what was paid by the manufacturer of the goods inspite of such exemption was duty and hence they are entitled to take Cenvat credit on the intermediate product used in final product and hence entitled to rebate of duty under Rule 18 of Central Excise Rules, 2002 when such product is exported. 3. Against this order the Commissioner of Central Excise, Ahmedabad III has given authorization to the jurisdictional Assistant Commissioner, to file appeals and accordingly he filed appeals on the ground that the products manufactured and exported are exempted from duty of excise vide Sr. No. 33 of Notification No. 10/2003-C.E., dated 1-3-2003 as amended by Notification No. 37/2003, dated 30-4-2003; that the Cenvat credit shall not be allowed on such quantities of inputs which are used in the manufacture of exempted goods in terms of sub-Rule (1) of Rule 6 of Cenvat Credit Rules, 2002; that Board vide Circular No. 2/91-CX-3 issued from F. No. 93/13/90-CX.3, dated 4-1-91 has clarified that "an assessee has got no option to pay duty on his volition in case the goods are fully exempted from payment of duty" that availing of credit of duty and payment of duty through Cenvat accoun....
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....er an assessee has got an option to pay duty on exempted export final products on their own volition and to avail Cenvat credit of duty paid on inputs used in the manufacture of said final products. (ii) In this regards, I find that the Hon'ble Tribunal in case of Everest Converters - 1995 (80) E.L.T. 91 (supra) has held that, "Exemption from duty vis-a-vis Modvat Scheme - Option of assessee to claim or not to claim benefit of exemption notification issued under Section 5A (1) of Central Excises and Salt Act, 1944 - Modvat credit of duty paid on inputs used in manufacture of final product on which duty paid, not to be denied even though final product exempt from duty - Rule 57C of Central Excise Rules, 1944 not applicable in such a case - Rule 57A ibid." Discussing the issue involved at length, in the subject order, Hon'ble Tribunal observed that- "5.4 It would thus be observed that the power under Section 5A (1) given to the Central Government is to issue a notification for exemption from duty leviable on such excisable goods. Power to exempt is without doubt a beneficial power. It can only reduce rates of duty. Notifications, no doubt has statutory force, drawin....
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....t of exemption notification, that party has to strictly follow the requirements of the notification and the benefit of doubt in cases of any ambiguity or doubt does not and cannot benefit the party inasmuch as, here is a case, I find that the petitioner was enjoying a concession on the basis of the notification in question, otherwise the petitioner was liable to pay duty on the basis of the ordinary rate which is admittedly higher than the concession rate. "... &....
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.... with Notification 177/86-CE. issued there under, an assessee is entitled to benefit of Modvat credit of duty paid on inputs for the purpose of utilising the credit towards payment of duty on the final product. Effect is that an assessee is entitled to or, acquires a right to, the benefit of full exemption notification as also to the benefit of Modvat credit of duty paid on inputs. These are mutually exclusive benefits as well inasmuch as, on the one hand, if his final product is not liable to pay duty at all, benefit of Modvat credit of duty paid on inputs will not be available to him, and on the other, if he wants to pay duty on final product, benefit of Modvat credit of duty paid on inputs cannot be denied to him. It does not require an authority to say that if a person has a choice of one of the two benefits available to him, it is his option which benefit he would like to avail of. 5.9 In view of the aforesaid discussion we hold that it is the option of an assessee to claim or not to claim the benefit of an exemption notification issued under Section 5A(1). If the basic premise of C.B.E.C.'s Circular of 1991 falls, the conclusion based on that premise also falls. Consequent....
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....ods were fully exempted from payment of duty. 3. A show cause notice was accordingly issued to the respondent on 19th July, 1991 for recovery of the Modvat credit which had been utilised by the assessee. The demand raised in the show cause notice was confirmed by the Assistant Collector. The appeals preferred by the assessee were rejected by the Collector of Central Excise. However, the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) reversed the findings of the Department and held, relying upon an earlier decision of Tribunal, that the assessee had the option not to avail of the exemption but to pay the duty and avail of the Modvat credit. 4. The Department is in appeal before us. Apart form the question whether the Department ought to be allowed to question the decision of the Tribunal when the Tribunal had merely relied upon its earlier decision which decision has not been challenged by the Department, we are of the view that there is no necessity to interfere with the decision of the Tribunal in view of the fact that it is the admitted case as stated in the special leave petition, that the issue is merely technical and that there was no revenue implication. ....
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....se may be. "The same view that because of an exemption levy of duty of an article is for scrapped, was expressed by the Andhra Pradesh High Court in Andhra Pradesh Paper Mills Ltd. v. ACCE - 1980 (6) E.L.T. 210 and by the Orissa High Co in Mamta Drinks and Industries Ltd. v. ACCE 1987 (30) E.L.T. 224. It would then follow that when there is an exemption granted to an article, there are two rates of duty leviable. One, a rate prescribed by the statute, and secondly the rate granted by exemption notification, which in any case can not be equal to or more than the duty prescribed in the statute and always has to be less including nil. 9. In this understanding of the matter, if an assessee choose no to avail of an exemption notification, it cannot be said that he is in effect exercising an option to avail or not to avail the parliamentary will. It is the same legislature which has provided him two rates of duty one of which he is required to follow. 10. Our reservation regarding the correctness of Everest Converters have been resolved. We are therefore in agreement and the process of reasoning contained in that decision. 11. The Departmental representative's arguments were con....