SUN DYE-CHEM Vs. CCE

JUDGEMENT

(1.) M /s. Sun Dye -Chem have filed the present appeal against the Order -in -Appeal No. 116/03 dated 19.6.2003, by which the Commissioner (Appeals) has confirmed the demand of Central Excise duty against them.

(2.) SHRI Manjeet Singh Gupta, learned Consultant, submitted that the appellants, a SSI Unit manufacture food colours; that they filed a classification list effective from 1.4.93 claiming the benefit of small scale exemption notification, being unaware of the fact that the concessional rate of duty was not applicable to them in view of the new criteria mentioned in the Notification No. 1/93 dated 28.2.93; that under this Notification, the benefit of the notification was applicable to SSI units differently as under: "(i) to undertakings registered with the Director of Industries in any state or the Development Commissioner (Small Scale Industries) as a small scale industry, and (ii) to a factory other than a factory which is specified in (i) above; that the appellants, unaware of the implication of the Notification, continued to work under Modvat Scheme paying duty at concessional rate on their final products, though they had become eligible to full exemption up to Rs. 30 lakh in view of the Notification No. 84/93 dated 4.5.93; that they came to know the various notifications only when they received a show cause notice dated 13.9.93 demanding differential duty for the period from 1.4.93 to 31.8.93; that in their reply dated 7.10.93, they mentioned that they were unnecessarily paying duty under Modvat Scheme and would be filing a revised classification list in order to claim full exemption from payment duty up to Rs. 30 lakh; that they filed a revised classification list on 11.10.93 claiming the benefit of Notification No. 1/93 -CE as amended by Notification No. 84/93; that they had also surrendered the Modvat Credit taken by them during the financial year and also debited duty in respect of raw -material lying in stocks or lying used in semi -finished/finished goods; that, however, the Assistant Commissioner, under the Order -in -Original No. 222/99 confirmed the demand of duty and imposed a penalty on the ground that there is no provision for granting partial exemption while claiming Modvat Credit to units not registered with the Director of Industries; that the Commissioner (Appeals) also, under the impugned order, has rejected their appeal except reducing the quantum of duty on the ground that amended classification list filed on 11.10.93, cannot be approved with retrospective effect. The learned Consultant, further, submitted that the Commissioner (Appeals) has himself accepted the legal position in the impugned order that an assessee can opt out of Modvat Scheme by reversing the credit taken during the period and the credit in respect of raw -materials, semi -finished and finished goods lying in stock; that this has been complied with by them; that till approval of the classification list by the proper officer, all assessments are made on provisional basis and are finalised only after approval of the classification list; that the classification list, filed by them on 11.10.93, was only assertion for opting out of Modvat Scheme which could be done in time during the course of the financial year.

(3.) COUNTERING the arguments, Sh. Vikas Kumar, learned SDR, submitted that it is not disputed by the appellants that initially w.e.f. 1.4.93, they had opted for the benefit of Notification No. 1/93 [Clause (1)(a)(i) of the Notification]; that the benefit of the Notification for the said clause is available only to a factory, which is registered as small scale industry; that as the appellants were not registered as small scale industry, they were not eligible for the benefit of the said exemption under Clause (1)(a)(i) of the Notification No. 1/93; that they cannot change their classification list retrospectively which they are trying to do by filing the revised classification list in October 1993; that, accordingly, the duty confirmed against them is justified.