S.R.F. Limited Vs. Commissioner of Central Excise, - Court Judgment

Excerpt:
1. this appeal arises from order-in-appeal no. 19/2001 dated 28.2.2001 by which the commissioner (appeals) confirmed the order-in-original no.59/99 dt. 30.11.99 passed by the assistant commissioner of central excise, chennai-i commissionerate. the appellants are manufacturers of nylon compounded chips, nylon yarn and nylon tyre cord fabric falling under chapter heading numbers 39.08, 54, 02, and 59.02. they also availed modvat credit in respect of nylon polyamide chips falling under chapter sub heading 3908.10 on which the duty had been paid by their supplier m/s suncity synthetics ltd. and they had utilised the duty paid inputs in the manufacture of nylon compounded chips.2. the revenue had taken a view that the duty paid by their supplier, i.e. m/s suncity synthetic ltd. on the inputs.....

Judgment:
1. This appeal arises from Order-in-Appeal No. 19/2001 dated 28.2.2001 by which the Commissioner (Appeals) confirmed the Order-in-Original No.59/99 dt. 30.11.99 passed by the Assistant Commissioner of Central Excise, Chennai-I Commissionerate. The appellants are manufacturers of nylon compounded chips, nylon yarn and nylon tyre cord fabric falling under Chapter heading numbers 39.08, 54, 02, and 59.02. They also availed Modvat credit in respect of nylon polyamide chips falling under chapter sub heading 3908.10 on which the duty had been paid by their supplier M/s Suncity Synthetics Ltd. and they had utilised the duty paid inputs in the manufacture of nylon compounded chips.

2. The Revenue had taken a view that the duty paid by their supplier, i.e. M/s Suncity Synthetic Ltd. on the inputs was irregular as it was an exempted product and on this ground the Assistant Commissioner had directed them to reverse the duty paid by them through Modvat credit.

However, on appeal, the Commissioner (Appeals), Jaipur vide his Order-in-Appeal No. 54-57 (KDT) CE JPR-II (24-27)/2001 allowed the appeal in the light of the 12 judgments cited before him holding that the said Suncity Synthetic Ltd. can either avail the exemption notification or instead pay duty in order to continue the Modvat claim.

In view of this position and judgments rendered in the case of Larger Bench in the case of Ludhiana Steel Mills as reported in 1994 (69) ELT 789, Bansal Auto Parts Industries v. CCE [1998 (28) ELT 268; Narmada Petrochemicals Ltd. v. CCE [2000 (121) ELT 468 and Bombay Dyeing & Manufacturing Co. Ltd. CCE [2000 (40) RLT 113], Ld. Counsel submits that the issue is no longer res integra and duty which had been paid by the supplier, i.e. M/s Suncity Synthetics on the inputs namely nylon Polyamide chips is justified and they were entitled to take Modvat credit on such duty paid inputs. He submits that this submission was accepted at the time of hearing of stay petition by Stay order No.471/2001 dated 11.9.2001 and complete waiver had been granted and the matter had been listed today for final disposal. He reiterated the arguments as made earlier and submits that the judgments cited by him clearly laid down the position that the supplier can avail the benefit of exemption or pay duty, and the choice is left to him. In that view of the matter, he submits availment of credit by them on such duty paid inputs is correct in law and in terms of the cited judgments.

3. Heard Ld. SDR who on perusal of the citations, fairly submitted that in terms of the citations, the issue is covered as contended by Ld.

Counsel.

4. On a careful consideration of the submission and perusal of all the judgments cited above, we notice that the issue is no longer res integra and it has been clearly laid down that the assessee can avail the exemption available in Notification or pay duty. In the present case, their supplier had paid duty and the matter was contested and the Commissioner (Appeals), Jaipur allowed the appeal of the supplier and upheld the payment of duty. In view of the Larger Bench judgment cited before us, the appellants contention that the duty which had been paid on the inputs and they availing Modvat credit is in terms of law is required to be accepted by respectfully following the judgments cited.

In that view of the matter, the impugned order is set aside and appeal allowed.