Per V.K. Agrawal :

The issue involved in this appeal filed by M/s. Jaina Detergent (P) Ltd. is whether modvat credit under Rule 57A of Central Excise Rules can be availed of simultaneously alongwith the clearance of the goods without payment of duty.

2. Shri Jitender Singh, ld. Advocate, submitted that the appellants manufactured detergent cake under their own brand name as well as under a different brand name of other person on job work basis. The appellants were availing of benefit of notification no. 1/93 in respect of detergent cake manufactured with their own brand name. On 7.5.93, they filed a declaration for availment of modvat credit in respect of detergent cake affixed with brand name of other person and continued to clear the detergent cake affixed with their own name at nil rate of duty under notification 1/93. The Addl. Collector demanded the duty in respect of clearance of detergent affixed with their brand name, which was confirmed by the Collector (Appeals), in the impugned order, holding that the appellants have availed of the exemption in terms of clause 1 (a) (i) and 1 (a) (ii) of notification no. 1/93 simultaneously which is not permissible and accordingly, the duty has been correctly demanded and confirmed. The ld. Counsel, further, submitted that the benefit of notfn. is not available to the goods affixed with the brand name of another person, who is not eligible for the exemption under the notification. And as such, the goods manufactured for another person are not specified goods for the purpose of notification 1/93. They are manufacturing two different goods - (1) with their brand name in respect of which benefit of notification 1/93 is available and (2) the goods affixed with brand name of another person. The Tribunal, in a number of cases starting with Faridabad Tools reported in 1993 (63) E.L.T. 759, which has been upheld by the Supreme Court as reported in 1996 (82) E.L.T. A149 has held that the benefit of modvat credit can be availed of simultaneously alongwith clearance of goods at nil rate of duty. He also relied upon the decision in the case of Vinko Auto Industries Vs. C.C.E., Chandigarh (Order No. 348-349/96-C dated 22.5.96).

3. Countering the arguments, Shri Sumit K. Das, ld. D.R., relied upon the Trade Notice No. 62/86 dated 3.9.86 of Delhi Collectorate in which it was clarified that the manufacturer can not simultaneously avail of modvat credit for some products and full exemption for other products under the Small Scale Exemption Scheme. He also submitted that though the modvat declaration was filed on 7.5.93, the claim under Rule 57H of Central Excise Rules was filed in June, 1993 only and the duty on Acid Slurry which was utilised in the manufacture of detergent cake cleared at nil rate of duty was only reversed in June after accumulating the credit. In view of this position, the imposition of penalty on the appellants is justified.

4. Shri Jitender Singh, ld. Advocate, in reply, submitted that the show cause notice has not been issued alleging late reversal of modvat credit on Acid Slurry. He also submitted that this is not a fit case for imposition of penalty as everything was done after intimating to the department.

5. We have considered the submissions of both the sides.

6. In Faridabad Tools case (supra) and Vinko Auto Industries case relied upon by the ld. Counsel, the Tribunal has held that the assessee can avail of simultaneous availment of benefit of small scale notification and modvat credit on different goods. In the present matter, no doubt, the goods involved is only detergent cake but these are two different detergent cakes in the sense that one detergent cake manufactured by them is affixed with their own brand name which is eligible for the benefit of notification no. 1/93. The other detergent cake affixed with the brand name of the other person is not covered by notification no. 1/93. The Collector (Appeals) was not justified in his findings that the appellants have, simu