CCE Vs. ALCON ENGG. INDUSTRIES

JUDGEMENT

(1.) The issue involved in this appeal, filed by the Revenue, is whether respondents, M/s. Alcon Engg. Industries can avail the exemption from payment of duty in one unit and simultaneously pay the duty and avail MODVAT Credit in their 2nd unit.

(2.) Sh. H.C. Verma, learned D.R., submitted that the respondents are having two units; that in one unit they are manufacturing plastic containers falling under Chapter 39 of the Central Excise Tariff; that initially, they opted for payment of duty under Notification No. 38/97 -CE dated 27.6.1997; that, subsequently, they surrendered their registration; that in their second unit, the respondents are manufacturing cable terminals falling under Heading 85.36 of the Central Excise Tariff on which they were paying duty as per Notification No. 38/97 and, thereafter, under Notification No. 9/98 -CE dated 2.6.1998; that the Assistant Commissioner, under Order -in -Original No. 14/01 dated 19.7.2001, demanded the duty on plastic containers and imposed penalty on the ground that the unit is not eligible to avail of exemption as their 2nd unit was paying duty under Notification No. 38/97 -CE; that, however, the Commissioner (Appeals), under the impugned order, has allowed the appeal relying upon the decision of the Tribunal in the case of Modern Industries Enterprises v. CCE, New Delhi 1997 (22) RLT 204 (CEGAT) wherein it has been held that simultenous availment of exemption and MODVAT Credit in respect of factories manufacturing goods falling under Different tariff headings, is admissible. The learned D.R., further, submitted that when one unit has availed the benefit of Notification No. 38/97, they cannot claim exemption in respect of other unit; that the condition No. 2 of Notification No. 38/97 clearly provides that once a manufacturer opts for Notification No. 38/97, he cannot change the option during the financial year under any circumstances.

(3.) Countering the arguments, Sh. J.P. Kaushik, learned Advocate, submitted that the option filed under Notification No. 38/97 or 9/98 by the unit manufacturing cable terminals will be applicable for goods manufactured in the said unit only; that it has been held by the Tribunal, recently, in the case of Innovative Tech Pack Ltd. v. CCE, Delhi 2002 (51) RLT 26 (CEGAT -Del.) that the assessee is entitled for the benefit of Notification No. 5/99 in respect of the specified goods manufactured in their factory irrespective of the fact that the assessee was clearing the goods on payment of full tariff rate and was availing MODVAT Credit in his 2nd unit. Reliance has also been placed on the decision in the Polyinks Pvt. Ltd. v. CCE, Delhi -TV 2004 (60) RLT 611 (CEGAT) : 2004 (114) ECR 477 (T). Finally, the learned Advocate, submitted that the show cause notice has been issued only to the unit manufacturing plastic containers and the show cause notice has not been issued to the other unit and as such the clearances of both the units cannot be clubbed togather; that it has been held in Ramsay Pharma (P) Ltd. v. CCE, Allahabad 2000 (41) RLT 713 (CEGAT) that if the show cause notice has not been issued to another unit, whose clearances are proposed to be clubbed, the order is bad in law.