KARM SANITATIONS Vs. COMMISSIONER OF C. EXCISE

JUDGEMENT

(1.) THE issue involved in this appeal filed by M/s. Karm Sanitations is whether Modvat credit was available to them in view of the fact that they had opted to avail of exemption under Notification No. 16/97 -C.E., dated 1 -4 -1997.

(2.) COUNTERING the arguments Shri M.P. Singh, learned DR, submitted that availment of credit means taking of the credit in the books of account of the manufacturer; that the utilisation of the said credit can be at any time in future; that availment and utilisation cannot be treated as synonymous; that the arguments of the learned Advocate that the condition of the Notification No. 16/97 was that the inputs should be used in the manufacture of the specified goods is not correct inasmuch as in Modvat Rules there is no one to one correlation; that it is not necessary that same input in respect of which the credit was availed of should have been used in the manufacture of specified goods; that it is sufficient that the inputs as such were used for the manufacture of the specified goods. Finally, the learned DR submitted that Notification No. 16/97 clearly provided that the exemption contained in the notification shall apply subject to the condition that manufacturer does not avail of the credit of duty under Rule 57A of the Central Excise Rules paid on inputs used in the manufacture of the specified goods cleared for home consumption, the aggregate value of first clearance of which does not exceed Rs. 1 crore in the relevant financial year; that it is not in dispute that the value of the clearances was only Rs. 54,68,012.90 and as such they were not eligible to take the Modvat credit in their books of accounts; that there was no legal authority for taking the Modvat credit by the Appellants and as taking of the credit was itself illegal, the same could be disallowed under Rule 571 of the Central Excise Rules. The learned DR emphasised that by opting for the benefit of the Notification No. 16/97 the Appellants had given their right to take Modvat credit under Rule 57A. He finally submitted that the provisions of para 2(i) of Notification No. 38/97 is very clear as it provides that a manufacturer intending to avail the exemption in a financial year shall exercise his option in writing and such option shall be effective from the date of exercise of the option and cannot be changed during the financial year under any circumstances; that no such option in writing was filed with the Department; that filing of Modvat declared under Rule 57G cannot be treated as an option under Notification No. 38/97.

(3.) THE learned Advocate in reply again contended that Notification No. 16/97 contains the condition for availing of benefit of the notification and if the condition of the notification is not satisfied, the benefit under the notification can only be denied; that the provision of Rule 57 -1 of the Central Excise Rules are only invokable for violation of Modvat Rules and not for violation of any other rules or any condition in notification.