TMI Blog2004 (7) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... xempted from central excise duty under Notification No. 15/94-C.E., dated 1-3-1994. The condition for this exemption is that no modvat credit should be availed on the inputs used in manufacturing of these final products. In the present case, the credit had been availed on the inputs but had been reversed subsequently. The issue, therefore, is whether this reversal of credit after availment can satisfy the condition of non-availment of credit under the exemption notification. 5.The petitioner is a company registered under the Indian Companies Act which is engaged in the manufacture of Aqua Mineral Water classifiable under Chapter sub-heading No. 2201.19 (previously under Chapter sub-heading No. 2201.90) of the Schedule to the Central Excise Tariff Act, 1985. Its Unit No. 1 is located at D-18, Sector 3, Noida. The petitioner is also engaged in the manufacture of hot and cold water dispenser, classifiable under Chapter sub-heading No. 8479.19 of the Central Excise Tariff Act. This Unit is at Sector 6, Noida. The petitioner has another Unit being Unit No. 3 for manufacturing Polycarbonate bottle and P P bottles falling under Chapter sub-heading 3923.90 of the Central Excise Tariff Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved at the water unit and sent to the bottle Unit for the manufacture of bottles and the same are received back at the water Unit. 10.It is alleged in Paragraph 19 of the writ petition that on 16-10-1997 a team of the Central Excise officers of the Directorate General of Anti-Evasion, New Delhi visited the premises of the aforesaid three units of the petitioner. They recorded the statement of the Directors and other officers of the company vide Annexure 6 to the writ petition. It is alleged in Paragraph 22 of the writ petition that the petitioner voluntarily paid through PLA the amount of Modvat credit of Rs. 9,31,779/- after due intimation to the Central Excise authorities vide Annexure 8 to the writ petition. The petitioner reversed the credit amount of Rs. 1,29,600/- on 24-8-1996 vide Annexure 9 to the writ petition. Hence the total credit reversal was Rs. 10,61,379/-, which is the credit, availed on the granules going into the bottles. Further on 23-12-1997 the petitioner deposited Rs. five lacs under protest with due intimation to the Central Excise authorities vide Annexure 10 to the writ petition. 11.Thereafter a show cause notice dated 13-4-1998 was issued to the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire (P) Ltd. v. CC, Nagpur, 1996 (81) E.L.T. 3 has held as under :- "6. Drawing similar analogy we consider that subject to the reversal of Modvat credit taken with regard to the inputs which were utilised in the manufacture of duty free goods, the manufacturer could avail of the Modvat credit as well as full duty exemption under applicable small scale exemption notification with regard to some specified goods. Reference is answered accordingly. 7. As a result the impugned order-in-appeal dated 28-1-1999 passed by the Central Excise is set aside and the appeal of Franco Italian Company (supra) is allowed subject to the conditions that Modvat credit taken of the duty paid on the inputs which were utilised in the manufacture of duty free goods, is reversed." 18.In view of the above decision we are of the opinion that reversal of Modvat credit amounts to non-taking of credit on the inputs. Hence the benefit has to be given of the notification granting exemption/rate of duty on the final product since the reversal of the credit on the input was done at the Tribunal's stage. 19.The Tribunal while passing the impugned order dated 1-10-2003 [2004 (163) E.L.T. 55 (Tri. - Del.)] has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts the petitioner was not entitled to the benefit of Notification No. 15/94-C.E., dated 1-3-1994. 23.This view of the Tribunal is in our opinion patently erroneous and contrary to the decision of the five Member Larger Bench of the Tribunal as well as three member bench of the Tribunal, and is also contrary to the ratio of the decision of the Supreme Court in the case of Chandrapur Magnet Wire (supra). 24.In fact the decision of the five Member Larger Bench of the Tribunal in Franco Italian Company (supra) was followed by three Member Bench of the Appellate Tribunal in the case of ICON Pharma and Surgical (P) Ltd., 2000 (40) RLT 918. 25.The Tribunal again in a three Member Bench decision in the case of Tube Investment of India, Final Order No. 795/2002, wherein the specific issue was whether the reversal of credit subsequent to removal of goods, was fetal to the extension of benefits of the notification considered the matter at length. The majority decision upheld the argument of the assessee therein and held that reversal of credit subsequent to the clearance of exempted product is in line with the ratio of the Supreme Court judgment laid down in Chandrapur Magnet Wires ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest at 10% per annum from the date of deposit to the date of refund, and this refund must be made within two months from today. The petitioner is also entitled for any consequential benefits. 32.We may mention that we are passing the direction for interest since interest is the normal accretion on capital. 33.Often there is misconception about interest. Interest is not a penalty or punishment at all. 34.For instance, if A had to pay a certain sum of money to B at a particular time, but he pays it after a delay of several years, the result will be that the money remained with A and he would have earned interest thereon by investing it somewhere. Had he paid that amount at the time when it was payable then B would have invested it somewhere and earned interest thereon. Hence, if a person has illegally retained some amount of money then he should ordinarily be directed to pay not only the principal amount but also the interest earned thereon. 35.Money doubles every six years (because of compound interest). Rs. hundred in the year 1990 would become Rs. two hundred in the year 1996 and it will become Rs. 400 in the year 2002. Hence, if A had to pay B a sum of rupees 100 in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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