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TMI Blog2002 (5) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Director of Industries, Bombay. The petitioners, inter alia, manufacture aluminium collapsible tubes classifiable under Chapter Sub-Heading No. 8512.11 of Central Excise Tariff Act, 1985. Under the Finance Act, 1986, the provisions of Rule 57A to Rule 57J were introduced by way of amendment to the said Rules (popularly described as 'Modvat Rules'). Under the Modvat scheme while making payment of excise duty on finished goods, the duty on the raw materials used by the manufacturers are adjusted or in other words, if any duty is paid on the materials used in the manufacturing process, in that event, while making payment of excise duty, on the end-product, the duty which is already paid in respect of those materials are deducted. 3.The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not clear from the facts available on record whether or not the request made by the petitioners was accepted by the Excise Department. However, it appears that two show cause-cum-demand notices dated 28-10-1986 and 23-3-1987 came to be issued which required the petitioners to show cause as to why central excise duty in the sum of Rs. 77,977.96 and Rs. 66,041.64 should not be recovered from them under Section 11A of the Act. Reasons stated in both the notices are identical. The said reasons read as under : "M/s. Klin-O-Pack are manufacturer of Aluminium Collapsible tubes classifiable under Chapter No. 8312.11 and had opted for Modvat on 21-3-1986 and availed the Modvat facilities from 1-4-1986 to 13-4-1986 and thereafter withdrew themselv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86 was issued on 2-4-1986. The Government at the time knew very well that some assessee could be under Modvat scheme on that day and even thereafter for some time. Therefore, the Government's intention has never been to issue a notification as well as to forbid those assessee who were under the Modvat from taking benefit of the same. (d) If the notification is issued and the assessee is entitled to it the excise authorities cannot deny that on the basis of Ministry's letter without any specific provision for such denial. 6.The Assistant Collector Central Excise, Division VII, Bombay II, after hearing the petitioners rejected their contentions and held that the trade notices on the subject did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excises and Salt Act, 1944 and/or Central Excises Rules, 1944. 8.The case sought to be made by the petitioners is opposed by the learned Counsel appearing for the respondents. He submitted that the scheme of exemption under Notification No. 175/1986, dated 1st March, 1986 provided for an integrated method of computation of value of clearance made in a financial year. As per the notification, if a manufacturer avails of Modvat relief in respect of the specified goods, the concessional duty (normal duty less 10% Adv.) would be applicable. Keeping in view this position and the fact that there is no one to one correlation between the inputs and final products under Modvat Scheme, it is not possible to permit a manufacturer to opt out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said that once the petitioners had opted in, the petitioners could not opt out within the same financial year. The petitioners could not be compelled to operate under the Modvat Scheme when the petitioners has exercised such option. Revenue cannot be said to suffer in any manner whatsoever in such cases. No prejudice to the Revenue has been shown to us. Any circular, trade notice or instructions contrary to the Rules/Modvat Scheme could not be legal and valid. In this view of the matter, we hold that the petitioners were entitled to opt out of Modvat Scheme. In the result, impugned show cause-cum-demand notices dated 28-10-1986 (Exh. E) and 23-3-1987 (Exh. G) are quashed and set aside. Rule is made absolute in terms of prayer clause (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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