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TMI Blog2014 (4) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... it of the Modvat Credit under section 57A of the Central Excise Rules, 1944 (hereinafter referred to as the Rules) and paid full duty on the inputs used in the manufacture of final products to avail Modvat Credit. The credit was sought to be utilized for payment of duty on the final product. 4. The Department denied the said benefit on the premise that since the Respondent Assessees were eligible for exemption on clearances upto 30 lakhs under the notification and no duty was payable on the final products, they could not claim benefit of the Modvat credit in view of Rule 57C of the Rules. 5. The Commissioner of Central Excise (Appeals) vide his order dated 15.09.1995 denied Modvat credit to the tune of Rs. 3,16,095/- in the case of Grand Cord Industries and Rs. 9,01,754/- in the case of M/s Jhunsons Chemicals. The authorities held that an Assessee being covered under the said exemption notification had no option and the Modvat credit was not admissible under Rule 57C. 6. The Assessee/Respondents filed appeals before the Customs Excise and Gold (Control) Appellate Tribunal. The Tribunal vide order dated 03.03.1998 following their earlier decisions in the case of Everest Convertor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified duty paid on the inputs used [in the manufacture of a final product (other than those cleared either to a unit in a Free Trade Zone or to a hundred per cent Export- Oriented Unit)] shall be allowed if the final product is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty. 10. Rules 57A of the Rules allows for credit of any duty of excise paid on the goods used in or in relation to the manufacture of a final products and for utilising the credit so allowed towards payment of duty of excise leviable on the final products subject to certain conditions. 11. Rule 57C of the rules however stipulates that no credit of the specified duty paid on the inputs used in the manufacture of a final product shall be allowed if the final product was exempt from the whole of the duty of excise leviable thereon or was chargeable to nil rate of duty. 12. The Supreme Court of India in ICHALKARANJI MACHINE CENTRE (P) LTD. V. CCE, (2005) 1 SCC 465, AT PAGE 468 has laid down as under: "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 use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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, - (1) a factory which is an undertaking registered with the Director of Industries in any state or the Development Commissioner (small scale Industries) as a small scale industry under the provisions of the Industries (Development and Regulation) Act, 1951 (65 of 1951),- (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 the duty paid on the inputs used in the manufacture of the specified goods cleared for home consumption under rule 57A of the Central Excise Rules, 1994 (hereinafter referred to as the said Rules), from so much of the duty of excise leviable thereon which is specified in the said Schedule (read with any relevant notification issued under sub-rule (1) of Rule 8 of the said Rules of sub-section (1) of Section 5A of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. (See Union of India v. Wood Papers Ltd. {1990 (4) SCC 256} and Mangalore Chemicals and Fertilisers Ltd. v. CCT {1992 Supp (1) 21} to which reference has been made earlier.)" 22. In G.P. Ceramics (P) Ltd. v. CTT {2009 2 SCC 90}, this Court has held: (SCC pp. 101-02, para 29) "29. It is now a well-established principle of law that whereas eligibility criteria laid down in an exemption notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notification should be construed liberally. [See CTT v. DSM Group of Industries {2005 (1) SCC 657} (SCC para 26); TISCO Ltd. v. State of Jharkhand {2005 (4) SCC 272} (SCC paras 42-45); State Level Committee v. Morgardshammar India Ltd. {1996 (1) SCC 108}; Novopan India Ltd. v. CCE & Customs{1994 Supp (3) SCC 606}; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of either of the two whichever is more attractive and beneficial. The choice once exercised is binding and final and interchange may not be permissible, unless allowed but this is different to arguing that choice is not available. The two provisions are in alternative but the right of choice is not curtailed. 23. The Supreme Court of India in the case of COLLECTOR OF CENTRAL EXCISE VS INDIAN PETRO CHEMICALS 1997 (11) SCC 318 upheld the decision of the tribunal wherein it was held that where two exemption notifications were applicable, the Assessee had to take/avail of benefits of that notification which was more beneficial to it. 24. In the present case the manufacturers are admittedly covered both under the MODVAT Scheme and the exemption notification, if the right to chose is not granted then it would be disadvantageous for a manufacturer to get itself registered as a SSI unit. This would thus be to the detriment of the manufacturer to register as a SSI unit. This consequence is clearly not intended by the legislature/Rule. 25. The Respondents admittedly have not claimed or availed of any benefit under the exemption notification but have sought to claim benefit of only t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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