TaxTMI 
TaxTMI 
2004 (12) TMI 88
X X X X Extracts X X X X
X X X X Extracts X X X X
....Excises and Salt Act, 1944, against the final judgment and order No. E/1863/98-Bl, dated 17-9-1998 passed in Appeal No. E/829/92-B1 by the Customs Excise & Gold (Control) Appellate Tribunal, New Delhi, imposing inter alia duty amounting to Rs. 3.15 lacs and denying exemption under notification No. 175/86-C.E., dated 1-3-1986. 2. Briefly stated, the facts are as follows : The appellants are the manufacturers of components of machinery falling under chapter 9024.90. They also manufacture gear boxes and gear box covers falling under chapter 8483.00 of the Schedule annexed to the Central Excise Tariff Act, 1985. In order to manufacture the aforestated items, the appellants use iron and steel products falling unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appellants contended that they had not withdrawn their declaration filed under rule 57G; that the assessment officer was aware that the appellants had not availed of the Modvat credit during the financial year 1988-89 and, therefore, invocation of the proviso to section 11A was improper and not justified. 7. By order dated 16-12-1991, the Additional Collector of Central Excise found that the appellants had opted for the Modvat scheme when it was introduced in 1987-88; that under the scheme, the appellants were required to pay duty on steel bars (inputs) used in the manufacture of gear boxes and gear box covers (final products) for taking Modvat credit; that the appellants falsely made the department believe of having taken the Modvat cr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the notification No. 175/86-C.E., dated 1-3-1986 (as amended). The Tribunal further found that the appellants had wilfully suppressed above facts to enable their customers, who were their sister concern, to take higher credit of duty in respect of the final products of the appellants, which the sister concern used as its inputs. Under the above circumstances, the Tribunal refused to interfere with the order passed by the Additional Collector of Central Excise, on 16-12-1991. 9. Modvat is basically a duty-collecting procedure, which aims at allowing relief to a manufacturer on the duty element borne by him in respect of the inputs used by him. It was introduced w.e.f. 1-3-1986. The said scheme was regulated under rules 57A to 57J ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 85/85-Central Excises, dated the 17th March, 1985, the Central Government hereby exempts the excisable goods of the description specified in the Annexure below and falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the "specified goods") and cleared for home consumption on or after the 1st day of April in any financial year, by a manufacturer from one or more factories, - (a) in the case of first clearances of the specified goods up to an aggregate value not exceeding rupees thirty lakhs- (i) in a case where a manufacturer avails of the credit of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he amount of duty of excise payable on the specified goods under sub-clause (i) of clause (a), or as the case may be, under this clause, shall not be less than an amount calculated at the rate of 5 per cent ad valorem : Provided further that the aggregate value of clearances of the specified goods in terms of clause (a) and clause (b) of this paragraph taken together, shall not exceed rupees seventy-five lakhs." 13. The above notification envisaged total and partial exemption; it also categorized the clearances into first clearances and subsequent clearances; it also categorized manufacturers: into those who took Modvat credit and those who did not. Those who took Modvat credit were entitled to only concessional exemption, while....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ster concern was not entitled to the benefit of higher credit which was admissible to manufacturers who bought goods as their inputs from small scale industrial units (appellants herein). 15. It was argued on behalf of the appellants that they had availed of the Modvat credit as they had not withdrawn the declaration filed by them with the department. That, there was no wilful suppression as the department was aware, on the basis of their accounts, about the appellants not availing the Modvat credit and, therefore, the department had erred in invoking the proviso to section 11A in relation to the extended period for demanding excise duty. We do not find merit in the above arguments. The appellants never opted out of the Modvat scheme. Th....