ORDER
G.R. Sharma, Member (T)
1. The captioned 7 appeals arise out of the demands of duty for the Months of April, 1993, May, 1993, June, 1993, July, 1993, August, 1993 and September, 1993 and for the period from April, 1993 to September, 1994. A show cause notice was issued on 15-10-1993 in respect of these demands.
2. The facts of the case are that the appellants are engaged in the manufacture of food preparations such as Maltova and Viva covered under Chapter Heading 1901.19. In the process of manufacture of these food preparations, malt extract arises. The appellants were paying duty on malt extract and taking Modvat credit on this item and utilising credit of duty so taken for payment of duty on Maltova/Viva. The Notification No. 82/87, dated 1-3-1987 inter alia provided that the goods captively consumed shall be exempted. In the instant case, the malt extract was captively consumed in the food preparations, therefore, the department alleged that since the malt extract was exempt, the question of payment of duty on malt extract did not arise and, therefore, the credit of duty taken on malt extract used in the payment of duty on Maltova and Viva were irregular and raised the demand as aforesaid. The Assistant Collector confirmed the demand for duty. The Collector (Appeals) also upheld the contention of the department that the appellants were not eligible to pay duty on malt extract and utilised the credit of duty paid on malt extract for the payment of duty on Maltova/Viva wrongly. Against this finding, the appellants have filed these seven appeals.
3. Shri P.N. Puri, learned Advocate appearing for the appellants submits that when the department issued a show cause notice for the payment of duty on malt extract and utilisation of the credit of duty paid on malt extract for the payment of duty on Maltova/Viva, the appellants filed a refund claim on the ground that the department was holding that the malt extract was exempt and since the appellants paid duty, therefore, they were entitled to the refund of duty paid erroneously. He submits that the fact remains that the duty was paid on malt extract and that the duty was taken as a credit and utilised for the payment of duty on Maltova and Viva. He submits that at best it was a question of an adjustment and no further demand of duty was warranted. He refers to the decision of this Tribunal in the case of Polychem Limited [1997 (90) E.L.T. 156]. For the sake of clarity paras 11 and 43 of this judgment are reproduced as under :-
“In view of the ratios laid down by the Courts/Tribunal in the above noted cases, we hold that the appellant’s contention that they had a choice to pay the duty on the input VAM. and take the benefit on the final product under Notification No. 53/88. The issue can be viewed in a different light also and that is even if they had not availed of the benefit of Notification for the input VAM, even then the benefit of Notification No. 53/88 cannot be denied on the final product, Tolyvnyl Alcohol’, in the light of the ratio of the above judgment, as the input VAM is deemed to have suffered duty, as ‘Nil’ rate of duty, is also payment of duty.”
“Now, if notification is granting conditional exemption to a product, and the Notification No. 217/86 falls within that category, it is open for the assessee not to avail of exemption and pay the duty, and if the duty is duly paid, notwithstanding any other aspect, so far as applicability of Notification No. 53/88 is concerned, the item used have to be held as duty paid. To put it other way, Notification No. 217/86, issued under Rule 8 of the Rule (as it then existed), VAM used captively is exempt from whole of duty, which by virtue of the decisions referred to above, when said notification is held to be optional for the assessee to take recourse to, and the option is not availed of by the appellants who have chosen to pay duty, the VAM used as input in the manufacture of polynol becomes a duty paid input vis-a-vis the final product polynol, and such final product becomes eligible to avail of benefit vide Notification No. 53/88.”
4. The learned Counsel submits that their case was fully covered by the ratio of the decisions in the above referred cases in as much as identical facts were involved in both the cases. He, therefore, prays that the appeals may be allowed.
5. Shri Y.R. Kilanyia, learned JDR reiterates the findings of the lower authorities.
6. Heard the submissions of both sides. The short point for determination is whether there was an option available with the assessee to opt for the exemption or to opt for the payment of duty and take credit of duty on the inputs used for manufacture of intermediate product and used that credit of duty for the payment of duty on Maltova and Viva. In the instant case, we find that the exemption was conditional in as much as the goods as such were not exempted but only such goods which are captively consumed were exempted. Thus the facts of the present case are more or less identical to the facts that were before the Tribunal while deciding the case of M/s. Polychem Limited cited above. Following the ratio of that judgment, we hold that the appellants had rightly paid duty on malt extract and utilised the credit of such duty taken on malt extract for the payment of duty on final products namely Maltova/Viva. Therefore these seven appeals are allowed with consequential relief in accordance with law.
