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TMI Blog2005 (3) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... 03 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 2. (i) The brief facts of the case are that the respondents were engaged in the manufacture of table kitchen and other house hold articles made of stainless steel/Aluminium falling under C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 account on the said products is neither permissible nor legal and hence the claim of Cenvat credit and utilization for payment of duty on the goods exported is not proper, legal and admissible. 4. (i) The respondents in their memo of cross objection inter alia con tended that Board had withdrawn its earlier Circular No. 267/16/88-CX.8, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is-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, 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 5A (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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on the basis of the ordinary rate which is admittedly higher than the concession rate. "... [Emphasis supplied] It is, therefore, the intention (or choice) of an assessee which is material for claiming the benefit of an exemption notification. If he does not implement his intention of claiming the benefit of an exemption notification, he has to pay the tariff rate of duty applicable to the goods. The Tribunal further observed in para 5.6 that Board's ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Consequently, an assessee cannot be denied the benefit of Modvat credit of duty paid on inputs used in the manufacture of final product on which duty is paid, even though the final product is exempt from duty. This position reverts to the circular of 1988 relied upon by the Appellants herein, which, in our view, correctly reflects the legal position." (iii) I find that the aforesaid Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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. In that view of the matter, we dismiss these appeals but without any order as to costs." (v) Further, Hon'ble Tribunal in the case of Bombay Dyeing & Manufacturing Co. Ltd. v. Commissioner of Central Excise-IV - 2001 (135) E.L.T. 1392 has held that, "Exemption Notification - Option - Fabric woven captive consumed is eligible to pay duty - Assessee can take credit of Modvat even though the final goods are ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 confined essentially to assail Everest Convertors' on the ground that it relied upon a circular of the Ministry of Law that objection has now been set. His other argument that an exemption has to be availed of cannot really stand in the light of our discussion earlier. Once it is held that the exemption is in the nature of benefit, and that the benefit stands side by side with the rates of duty prescribed in the statute, the conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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