TMI Blog2000 (4) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... name "Lifelong". The impugned order has denied them the exemption on the ground that the appellants had taken Modvat Credit in respect of inputs used for the manufacture of the goods sold under the brand name "Lifelong" in violation of para 2 (iii) of Notification No.16/97. Para 2 (iii) of the Notification stipulates that the exemption shall apply only subject to the condition that "the manufacturer does not avail of the credit of duty" under rule 57A. 2. The contention of the assessee is that revenue's allegation that they had availed themselves of Modvat Credit on the inputs used in the manufacture of Oven Toaster Griller sold under their own brand name of "Lifelong" is not factually correct at all. They explained that the inputs for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision of the Supreme Court in the case of Chandrapur Magnet Wires Ltd. v. CCE reported in 1996 (81) E.L.T. 3 (S.C.) in support of this submission. The ld. Counsel for the appellant submitted that in the present case also, the appellant having paid 8% duty, the goods cleared under the brand name Lifelong had to be treated as goods produced without taking Modvat Credit. As against this, the ld. D.R. has submitted that it is a condition of Notification No.16 that the manufacturer does not avail of the credit of duty under Rule 57A. The appellant had taken Modvat Credit in respect of their entire inputs, including the inputs used in the manufacture of the goods cleared under the brand name Lifelong. Therefore, they remain barred from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts or segregated the inputs utilised for manufacture of dutiable goods and duty free goods, as should have been done. The contention of the Department that in this situation, the assessee is not entitled to reverse the entries and get the benefit of the tax exemption is a question which merits serious consideration. There is no doubt that the assessee should have maintained separate accounts for duty free goods and the goods on which duty has to be paid. But our attention was drawn to a departmental circular letter on this problem in which it has been clarified by the Ministry of Finance as under :- "3. The credit under MODVAT rules may be maintained chapterwise, MODVAT credit is not available if the final products are exempt or are char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture of the final exempted product will stand deleted in the accounts of the assessee. In such a situation, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. In other words, the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods." 4. The present appellant's case is identical. They were also producing exempted and dutiable goods from the same inputs which were procured and stored together. The exemption which they claimed was also subject to the same condition that Modvat Credit should not have been t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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