NATIONAL ORGANIC CHEMICAL Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THE issue involved in this appeal filed by M/s. National Organic Chemical Industries Ltd., (NOCIN) is whether PVC shoe Compounds manufacture by them is exempt from excise duty under Notification No. 53/88.

(2.) BRIEFLY stated the facts are that M/s. National Organic Chemical Industries Ltd. (NOCI) manufactured PVC Shoe Compounds and availed of Modvat credit of the duty paid on inputs under Rule 57A of the Central Excise Rules. The PVC Compounds manufacture by them are utilised for the manufacture of electrical cables and gum -boots and are known as PVC Cable Compounds and PVC shoe Compounds respectively. In respect of PVC Shoe Compounds the appellants have availed of exemption under Notification No. 53/88 which provides Nil rate of duty in respect of PVC Compounds, if no credit of the duty paid on the inputs used in the manufacture of PVC Compounds has been availed of. A show -cause notice, dated 2.4.93 was issued to them for demanding Central Excise Duty amounting to Rs. 10,18,46,595 during the period from 1.3.88 to 30.6.92 on the ground that they had availed of Modvat credit of the duty paid on the inputs used in the manufacture of PVC Shoe Compounds. The Collector of Central Excise under the Impugned Order dated 31.12.93, confirmed the demand of duty and imposed a penalty of Rs. 50 lakhs not accepting the plea of the appellants that they had been regularly reversing the Modvat credit in respect of the inputs which had gone into the manufacture of PVC Shoe Compounds.

(3.) SHRI A.N. Setalvad, learned Sr. Advocate, submitted that as the inputs for both PVC Cable Compounds and Shoe Compounds were practically the same, the appellants used to raise credit on inputs received by them and then each month depending on the quantity of PVC Shoe Compound manufactured during that month, used to reverse credit in respect of quantity of inputs relating to that much quantity of Shoe Compounds; that the reversal of Modvat credit was done on the basis of actual production of PVC Shoe Compound during the month and not on the basis of clearance thereof during that particular month.