TMI Blog1997 (11) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... otification No. 1/93 as amended. The lower authorities held against the appellants. Hence the appeal. 3. Appellants are engaged in the manufacture of excisable goods falling under Chapter sub-headings, 85.44 and 7408.19 of the Schedule to the Central Excise Tariff Act, 1985. The appellants were served with a SCN dated 30-9-1993 asking them to show cause as to why Modvat credit availed by them during the period 1-6-1993 to 31-8-1993 should not be recovered from them under Rule 57-I for wrongfully availing Modvat credit. The SCN alleged that the appellants, being not registered as a SSI unit with the prescribed authorities were governed by Clause (2) of Notification No. 1/93 dated 28-2-1993 as amended since the goods manufactured by them we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdictional Assistant Collector raised no objection to the appellants availing Modvat facilities and their RT 12 Returns for the relevant period were duly assessed and finalised. Appellants contended that in terms of Notification No. 1/93 exemption from payment of duty was provided to unregistered units up to Rs. 30 lakhs. This provision should not be construed to mean that there was a prohibition from payment of duty cleared up to a value of Rs. 30 lakhs. In terms of Clause (2) of the Notification there was no prohibition for an unregistered SSI unit from paying duty on the goods on which exemption had been granted by the Notification. On the other hand, they contended that Notification No. 1/93 actually provided an option to such units ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, held that if a manufacturer chose to pay duty, any amount paid towards such duty will not be treated as duty. In its true sense it can only be treated as a deposit and therefore no Modvat credit can be availed by such manufacturer in respect of duty paid on the inputs going into the manufacture of a final product. Deputy Collector also rejected the appellants contention that the prohibition under Rule 57C was applicable only in those cases where the duty had actually not been paid on the final product. He held that Rule 57C clearly stipulated that no credit of specified duty paid on the inputs used in the manufacture of the final product shall be allowed, if the final product is exempted from the whole of duty leviable thereon or is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to fail. He, therefore, held that as far as Rule 57C is concerned the question whether there was an option to avail of the benefit of exemption under Notification No. 1/93 or whether an assessee has chosen to avail the said benefit or not is of no consequence. On the second question whether after approval of the classification list by the appropriate authority further demand can be raised on such classification list, the Collector (Appeals) held that the argument of the appellants was not legally tenable. He held that the demand for duty in the instant case was not related to the approval of the classification list. Demand in the instant case was in terms of Rule 57C. Since the final product of the appellants were exempted from the whole o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment s case as contained in the impugned order. 9. We have considered the submissions made before us and have perused the records. 10. On the question whether an assessee had an option either to choose for an exemption available under a Notification issued under Section 5A of the Central Excise Act or to avail the Modvat credit facility under the Modvat Scheme, the legal position has been settled by the recent decisions of the Tribunal, among others, in Everest Convertors, supra, and the following other cases, viz, - (i) Gothi Plastic Industries v. Collector of Central Excise, 1996 (83) E.L.T. 123; (ii) Mechiv Engineers v. Collector of Central Excise, 1997 (20) RLT 200; and (iii) Prominent Plastic Industries, 1997 (93) E.L.T. 299 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Notification No. 1/93, there could be no question of their being compelled to operate under the said Notification. They cannot also be denied the option of paying duty on the inputs and claiming Modvat credit for their clearances. In such a situation there is no justification invoking Rule 57-I for demanding duty. 11. As regards the maintainability of the SCN under Rule 57-I, in the facts and circumstances of the case we are in agreement with the submissions made on behalf of the appellants that no demand for wrong availment of Modvat credit can be raised on the appellants, having regard to the fact that the appellants have already paid the duty of excise on their inputs. 12. In view of the above, we allow the appeal and set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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