TMI Blog1996 (2) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in terms of Notification No. 180/88-C.E., dated 13-5-1988. A show cause notice dated 112-3-1993 was issued to them alleging that before clearing the exempted goods as above during the period September 1992 to February 1993 they had not reversed Modvat credit amounting to Rs. 29,59.084.15 taken on the inputs but had utilised it towards clearance of other dutiable products and had thereby contravened the provisions of Rules 57A, 57C and 57F of the Central Excise Rules, 1944. The case was adjudicated by the Assistant Collector confirming the demand of duty equal to the Modvat credit in question. The Assistant Collector's order was confirmed by Collector of Central Excise (Appeals), Calcutta. Hence this appeal. 2.The stay petition in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quirement of non-availment of credit of duty under Rule 56A or Rule 57A does not apply in respect of their final product in question. Their availing Modvat credit does not affect their entitlement to the benefit of exemption from duty under this Notification. The learned counsel submitted that this exemption notification is not of the type contemplated under Rule 57C which will have the effect of disallowance of Modvat credit. It is a conditional exemption notification. The notification, in terms of the said proviso, implicitly permits availment of exemption and of Modvat credit. The notification is issued under Section 5A of the Act and is, as if, part of the Act. The Notification will override Rule 57C, if there is a conflict. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty paid on inputs used in the manufacture of fully exempted final product, the argument that the stage of utilisation is different from the stage of giving credit is not of relevance. it was observed by the Bench that "insofar as an existing Notification is on the statute Book at the time of receipt of inputs for use in the manufacture of final products, it cannot be stated with any element of correctness that the manufacturer was not aware of availing of the said exemption Notification in the absence of any order on his hand for clearing the final product under the said Notification and that if a manufacturer wants to avail of the benefit of any Notification, he can do so even at a later stage by filing a refund claim. 6.The present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such exemption Notifications has been set out in Trade Notice No. 59-C.E./91, dated 30-7-1991 issued by the Chandigarh Collectorate [1990 (55) E.L.T. T49]. This explains the legal position with which we agree. Attention was invited in the said Trade Notice to the earlier Trade Notice No. 10-C.E./91(Misc. 3), dated 14-2-199l,withdrawing the facility regarding the option to pay excise duty on exempted goods to enable the user of such goods as inputs to avail of Modvat benefit. It was indicated that in order to provide option to pay duty and avail Modvat, the exemptions have been made conditional, available only if the credit of duty paid on inputs had not been availed. The subject notification with the proviso thereto constitutes one example ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een utilised by them for payment of duty on other non-exempted goods. This is not in accordance with the facility provided under this particular provision, apart from the availment of exemption attracting the sting of Rule 57C. The demand of duty is consistent with the said Rule. 8.The question of reversal of credit and permissibility thereof came up for decision before the Supreme Court in Chandrapur Magnet Wires P. Ltd. v. Collector of Central Excise, Nagpur. [Since reported in 1996 (81) E.L.T. 3 (SC)]. The relevant exemption Notification that was considered in the said case also contained a similar provision that the exemption from payment of the whole of duty was subject to the condition that no credit of duty paid on the specified go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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