Hon'ble Prakash Krishna,J.
1. The main question involved in this reference is, If two exemptions are available to the same class of goods then whether an assessee has an option of choosing anyone of them.
THE FACTS
2. M/s. Modi Xerox Limited (the Assessee), apart from others, manufactures toners. The toners is in the form of black powder packed in bottles. The bottles and its caps are also manufactured by the Assessee.
3. The Assessee had filed a declaration under Rule 57G specifying the toner as final product; HDPE, polypropylene, granules and ink were mentioned as inputs for the manufacture of toner.
4. The Assessee had been paying excise duty on the bottles and caps in terms of notification 53/88-CE dated 1.3.88; then subsequently in terms of Notification 14/92 dated 01.3.92 (the 1992 Notification).
5. The Assessee had been taking modvat credit of the duty paid on the bottles and caps, while paying the duty on the final product toner in which the value of packing material was also included.
6. Subsequently, the Assessee filed a classification list declaring plastic bottles and caps as excisable goods manufactured in the factory effective from March 1993. As indicated in the preceding paragraphs, the plastic bottles and caps are being captively used by the Assessee for packing toners and developers.
7. A show cause notice dated 14.10.93 was issued by the Adjudicating Authority requiring the Assessee to show cause as to why;
Their classification be not modified as the plastic bottles are to be levied 'nil' rate of duty under Notification No.217/86-CE dated 2.4.1986 (the 1986 Notification); and The modvat credit taken for input to make plastic bottles and caps be recovered from them.
8. The Assessee filed its reply. The Adjudicating Officer rejected the same on 11.4.1994. He by his order, Modified the classification list filed by the Assessee. The plastic bottles & caps for captive consumption were approved as 'nil' duty under the 1986 Notification;
Held that modvat credit was wrongly taken for inputs for the plastic bottles and caps;
Reversed the modvat credit in respect of aforesaid items amounting to Rs.4,86,217=92 during the period June, 1993 to February 1994.
9. The Assessee filed an appeal. It was dismissed on 29.9.1994.
10. The Assessee filed second appeal before the Customs, Excise and Gold (Control), Appellate Tribunal, New Delhi (the Tribunal). It was allowed on 8th of April, 1997.
THE QUESTIONS REFERRED
11. The Excise Department (the Department) filed an application to refer the question for opinion of the High Court. This application was allowed on 18.6.1999 and the following two questions have been referred:
(i) Whether the option either to pay duty and avail exemption under Notification No.53/88 or 14/92 is vested in the unit;
(ii) Whether the assessee was entitled to credit of duty paid on inputs when the resultant product was fully exempted in terms of Notification No.217/86.
12. We have heard Sri S.P. Kesarwani, counsel for the Department and Sri Nishant Mishra for the Assessee.
THE DECISION
13. There is no dispute between the parties that the case of the assessee is covered by both the Notifications. However, he can take benefit of only one of them.
14. The counsel for the Department submits that:
The 1992 Notification is general, whereas the 1986 Notification is specific for the goods being captively consumed;
In case there is specific notification then it will prevail over general one;
In this case 1986 Notification rather than 1992 Notification is applicable.
15. It has been held (see below for citations)1 that where there are two exemption notifications that cover the goods in question, the assessee is entitled to the benefit of the exemption notification which gives him greater relief.
16. If the goods are covered by the two Notifications, then as held by the courts, it is open to an assessee to choose any one of them. He may not choose one notification over the other if there is any specific or implied bar in the other notification.
17. The 1992 Notification is in supersession of the Notification no.53/1988-CE dated 1.3.88 that in turn had superseded even an earlier notification number 132/86 dated 1.3.86.
18. This shows that there were two different exemption schemes since 1986 in respect of certain goods;
One was the 1986 Notification that is being relied by the Department;
The other was also started in the same year namely 1986 by notification number 132/1986 dated 1.3.86 and ultimately culminated into the 1992 Notification and is being relied by the Assessee.
19. The question is, does one notification or more specifically the 1986 Notification specifically or impliedly bar opting out the other exemption now being offered by the 1992 Notification.
20. In the present case, there is neither any specific, nor implied bar in the 1986 Notification from opting for exemption under the other notification. On the contrary, the explanation (ii) to the 1986 Notification suggests that in respect of packing materials, it is a kind of a residuary notification and is applicable in case an assessee is not taking advantage of any other exemption. It impliedly permits taking of advantage of any other exemption. The only prohibition in 1986 Notification is that its benefit cannot be taken to the extent if its being already taken or in other words twice.
21. In our opinion, the Assessee could choose the 1992 Notification CONCLUSIONS
22. In view of our opinion, the Tribunal has correctly held that the Assessee is entitled to take benefit of the 1992 Notification.
23. In the result, We answer the first question in affirmative i.e. in favour of the Assessee and against the Department;
In view of our answer to the first question, the second question does not survive.
24. Let our opinion be sent down to the Tribunal for passing consequential order.
Order Date :- 23.12.2010 LBY