2004 (97) ECC 413 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

West Zonal Bench -- Mumbai

Ms. Jyoti Balasundaram, Member (J) and Moheb Ali M., Member (T)

Axel Polymers Limited

Versus

Commissioner of Customs & Central Excise, Vadodara-I

Appeal No. E/1368/2004-Mum

[Arising out of Order-in-Original 27/BRC-I/MP/2003 dated 30.12.2003 passed by Commissioner of Customs & Central Excise, Vadodara-I]

Order No. A/570/WZB/2004-C-II, dt. 9.7.2004, Certified on 5.8.2004

Modvat Credit

Option -- Compounded LDPE and HDPE, and compounded Polyamide falling under Chapter 39 of the first schedule to CETA -- Manufacture of -- The assessee has an option to pay duty and avail modvat credit or clear the goods with payment of duty under the cover of exemption notification.

Appeal is allowed

PRESENT :

Shri J.C. Patel, Adv. for the appellant.

Shri R.K. Pardeshi, JDR for the respondent.

Cases Cited :

1. Bansal Auto Parts v. CCE, 2003 (161) ELT 1163 (Followed)     [Para 2]

2. Everest Covertors v. CCE, 1995 (80) ELT 91 (Followed)            [Para 2]

3. Ganesh Metal Processing Industry v. Union of India, 1996 (81) ELT 11 (AP) (Followed)   [Para 2]

4. Gothi Plastic Industries v. CCE, 1996 (83) ELT 123 (Followed)  [Para 2]

Per : Jyoti Balasundaram

The issue in dispute in the present appeal is as to whether the appellants, who are engaged in the manufacture of compounded LDPE and HDPE, and compounded Polyamide falling under Chapter 39 of the first schedule to CETA, 1985, have rightly paid duty on inputs used in the manufacture of the above and availed modvat/cenvat credit thereupon, instead of availing of exemption of final products under serial No. 73 of the table appended to Notification 6/2002-CE dated 1.3.2002 which exempts plastic raw materials falling under heading 39.01 to 39.14 if produced out of waste and scrap of plastic (the appellants herein used waste and scrap as inputs in the manufacture of their final products). According to the department the appellants are not entitled to modvat/cenvat credit as their final products are exempt from duty, and the appellants had no choice but to avail of exemption under the above-mentioned notification. On this basis credit of Rs. 33,06,227 has been disallowed and penalty of equal amount has been imposed upon the appellants.

2. On a careful consideration of the submissions of both sides we find that the issue involved in the present case is no longer res integra having been covered in favour of the assessees by a long line of decisions commencing with Everest Covertors v. CCE, 1995 (80) ELT 91; Gothi Plastic Industries v. CCE, 1996 (83) ELT 123 and the decision in the case of Bansal Auto Parts v. CCE, 2003 (161) ELT 1163 wherein the Tribunal has distinguished the judgment of the Hon'ble Andhra Pradesh High Court in Ganesh Metal Processing Industry v. Union of India 1996 (81) ELT 11 (AP).

3. Following the ratio of the above decisions which is to the effect that the assessees has an option of either paying duty and availing modvat credit or clearing the goods without payment of duty under the cover of exemption notification, we set aside the impugned order and allow the appeal.

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