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SUPREME COURT OF INDIA
A.K. SIKRI, ROHINTON FALI NARIMAN, JJ.
Commissioner Of Central Excise & Customs - Appellant
Versus
M/s. Precot Meridian Ltd. - Respondent
Civil Appeal No. 3978 Of 2007
Decided On : 08-10-2015
Exemption Notification - Central Excise - The court upheld the benefit of exemption Notification No. 5/99-CE subject to the condition that the assessee had not taken any credit under specific rules of the Central Excise Rules, 1944, in the manufacturing process.
Fact of the Case:
The respondent's product is covered by the description of goods in the General Exemption Notification. The assessee had utilized MODVAT credit in the previous two years prior to the issuance of the notification, but claimed that no such credit was taken or utilized after the notification, and the earlier credit was returned or paid back.
Finding of the Court:
The Tribunal decided in favor of the assessee, citing previous judgments that even if the MODVAT credit was utilized but later refunded, it would amount to not utilizing the credit. The court upheld the Tribunal's decision, noting that the Department accepted the previous judgments and did not file an appeal.
Issues: The issue revolved around whether the assessee fulfilled the condition to become eligible for the benefit of the Exemption Notification, considering the utilization and refund of MODVAT credit.
Ratio Decidendi: The court relied on previous judgments that held the refund of MODVAT credit as equivalent to not utilizing the credit, and the Department's acceptance of these judgments influenced the court's decision.
Final Decision: The appeal was dismissed, and the court did not find any reason to interfere with the Tribunal's decision in favor of the assessee.
ORDER :
1. Indubitably, the benefit of exemption Notification No. 5/99-CE dated 28.02.1999 is available subject to certain conditions and one of the conditions is that the assessee had not taken any credit under Rule 57A or Rule 57B or Rule 57Q of the Central Excise Rules, 1944, in the process of dyeing, printing, bleaching or mercerising in the manufacture of dyed, printed, bleached or mercerised yarn.
2. As mentioned above, this Notification was issued on 28.02.1999. The product of the respondent is covered by the description of goods at Serial No. 133 of the Table annexed with the General Exemption Notification. The assessee, however, had utilized the MODVAT credit in the previous two years prior to 28.02.1999. As per the assessee, after the issuance of this notification, no such MODVAT credit was ever taken or utilized. Even the earlier MODVAT credit which was utilised was returned or paid back on 10.01.2005. In this scenario, question arose as to whether the assessee fulfils the aforesaid condition in order to become eligible to get the benefit of the Exemption Notification.
3. We note that five-Member Bench of the Tribunal in the case of 'Franco Italian Co. Pvt. Ltd. v. Commissioner' [2000 (120) ELT 792 (T-LB)] had taken the view that even if the MODVAT credit was utilised but, thereafter, refunded, it would amount to not utilising the said MODVAT credit. Same view has been taken by the High Court of Allahabad in 'Hello Mineral Water (P) Ltd. v. Union of India' [2004 (174) ELT 422 (All.)].
4. On a specific query put by the Court, we were informed that as far as the aforesaid two judgments are concerned, they were accepted by the Department and no appeal was filed there against. In the impugned judgment, the Tribunal has decided the issue in favour of the assessee relying upon the aforesaid two decisions.
5. We, thus, do not find any reason to interfere with this order. The appeal is dismissed accordingly.
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