FREEZE AIR INDIA Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN this appeal filed by M/s. Freeze Air India, the issue involved is regarding availment of Notification No. 75/87 -CE., dated 1 -3 -1987.

(2.) SHRI J.P. Kaushik, learned Advocate submitted that the appellants manufactured air -conditioners, cooling units and parts thereof that in their classification declaration with effect from 1 -4 -1998, they claimed exemption under Notification No. 75/87; that they had also declared therein that they would pay 15% of the duty on the first clearance of Rs. 30 lakhs; that the declaration was made according to their understanding of the notification; that accordingly they availed Modvat credit of the duty paid on the inputs and removed the finished products on payment of 15% duty; that the Assistant Commissioner under Adjudication Order No. 183/99, dated 20 -9 -1999 confirmed the demand of Central Excise duty and imposed penalty holding that the benefit of notification is not available to them as they chose to pay the duty even in respect of the goods up to the first slab of exemption that is Rs. 15 lakhs; that the Commissioner (Appeals) also rejected their appeal under the impugned Order on the ground that once they had paid the duty in respect of first clearance of goods up to Rs. 15 lakhs, it is clear that they had not availed the benefit of exemption under the notification and they had to discharge the duty on the Tariff rate. Learned Advocate, further, submitted that the appellants always wanted to avail the benefit of Notification No. 75/87 which is evident from the Classification Declaration filed by them; that they were under the belief that since they would be crossing the limit of Rs. 15 lakhs, they could pay the duty on the first slab as well; that under this bona fide belief they paid the duty for first slab of Rs. 15 lakhs though that no duty was payable; that by payment of duty on the value of the goods falling in the first slab at the rate applicable to the goods in the second slab, it cannot be held that they had opted out of the notification; that infact they had paid the excess amount as duty on the first clearance of Rs. 15 lakhs to which they are entitled for refund; that they are, however not making any claim for Central Excise duty paid in excess since the same had already been recovered from their customers. He relied upon the decision in the case of Ballarpur Sugar and Allied Industries Ltd. v. Commissioner of Central Excise, Aurangabad - 1999 (32) R.L.T. 223 (S.C.) wherein it has been held by the Supreme Court that if the assessee is otherwise entitled for exemption, it cannot be defeated merely on the ground that the factory had already paid the duty for the period in question,

(3.) COUNTERING the arguments, Shri Jagdish Singh, learned departmental representative submitted that Notification No. 75/87 exempts goods up to an aggregate value of Rs. 15 lakhs from the whole of the duty of excise and in respect of further clearance of Rs. 15 lakhs, the notification provides exemption to the extent of 15% of the duty leviable on the goods; that the appellants on their own paid the duty even in respect of goods up to Rs. 15 lakhs at the rate of 15% of the duty leviable which was not prescribed anywhere in the notification; that accordingly they have to pay the duty at the Tariff rate; that further, as they had opted to pay the duty even in respect of goods up to Rs. 15 lakhs, it shows that they opted out of notification and in respect of clearances falling under second slab, they have become liable to pay the duty at the Tariff rate. He finally mentioned that their intention, not to avail the benefit of notification from the beginning, is evident from the fact that from the beginning itself, they have availed of Modvat credit of the duty paid on the inputs. We have considered the submissions of both the sides. Notification No. 75/87 provides exemption as under : -