Full Judgment
Entry 38, which did not contain any condition provided partial exemption from duty in excess of 30% ad valorem. The appellant was availing of the benefit contained in entry 37 prior to 22.10.1993. It was not availing of modvat credit and therefore did not pay any duty on its finished goods.
2. On 6.1.1993 it filed two classification lists. One list indicated that the goods manufactured out of scrap out of duty paid plastic and modvat credit had been taken. The other list indicated that modvat credit had not been availed of, and indicated the intention to pay duty at 30%. In a letter of the same date addressed to the jurisdictional Superintendent, the manufacturer explained that it had decided to avail of the modvat scheme. On the date of filing the declaration it held stock of the finished goods, the list which was enclosed produced out of inputs on which credit had not been availed of. Therefore, the benefit of exemption contained in entry 37 of the table to notification 14/92 would be available to these goods.
3. The department did not accept this view. It proposed to deny the complete exemption to the duty claimed in respect of the goods, on the ground that, the rate on duty that would apply would be the rate of force on the date of their removal. The Assistant Commissioner confirmed the proposal in the notice. The Commissioner(Appeals) confirmed this view, with the qualification that modvat credit under Rule 57H may be permitted.
4. The reason advanced by the Assistant Commissioner that it is the rate of duty that applies on the date of removal of the goods not justify this conclusion. The exemption contained in entry 37 of the table to notification 14/92 continued to be in force and would apply to the goods that the appellant removed after if filed these two classification lists. The condition in that notification that the goods should have been manufactured out of material to which modvat credit has not been taken had also satisfied. The appellant had only commenced taking modvat credit with effect from 223.10.1993. The list enclosed to the letter which was received by the department on 22.10.1993, therefore, was a list of goods which had been manufactured out of the material on which credit had not been taken. The correctness of this list was also verified by the jurisdictional superintendent, who has made remarks to the effect, on the same date, on that letter.
5. The reason that the Commissioner(Appels) advances, that the appellant did not abide by the condition of the trade notice, requiring separate maintenance of accounts of raw material, finished goods etc, in cases where the manufacture seeks to avail of the exemption contained in entry 37 and entry 38 of the table to the notification is again unacceptable. The manufacturers made no such claim to simultaneous benefit of both the exemption. Its claim for clearance under entry 37 of the table to the notification was for the goods manufactured prior to 22.10.1993 and under entry 38 for the goods manufactured subsequently. There was, therefore, no reason for either of these two cases, the benefit claimed by the appellant.
6. The appeal is accordingly allowed and the impugned order set aside.
Consequential relief.