C.C.E. Jalandhar vs M/S. Jct Limited, Phagwara
- CitationAppeal No. E/216/2006-EX(DB)
Ratio decidendi
The rule this decision rests on
The concessional rate of duty under notification no. 14/2002-CE (Sl. No. 4), read with its condition 5, is not denied to a manufacturer of processed fabric merely because the cotton yarn from which the fabric was made was cleared without payment of excise duty under notification no. 22/96-CE, where the Explanation II to notification no. 14/2002-CE deems textile yarns or fabrics received for processing to be duty paid. The deeming fiction in Explanation II to notification no. 14/2002-CE must be given effect as written; an interpretation under which the deemed duty-paid status of the input fabric is disregarded would render that Explanation redundant, and the condition that appropriate duty be paid on inputs is satisfied accordingly. A Board circular dated 10.12.2002 that specifically addresses the availability of the concession in such situations, and which contains reasoning not shown to be erroneous, is to be followed by the adjudicating authority; a proposal for a notification under section 11C that the Board rejected does not by itself render the circular's interpretation of the exemption notification incorrect.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-in-Appeal No. 113/CE/JAL/2004 dated 30.11.2004 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Chandigarh].
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
Hon'ble Shri B. Ravichandran, Member (Technical)
1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3 Whether Their Lordships wish to see the fair copy of the Order?
4 Whether Order is to be circulated to the Departmental authorities?
C.C.E. Jalandhar .Appellants
Vs.
M/s. JCT Limited, Phagwara .Respondent
.
Appearance:
Shri Ranjan Khanna, DR for the Appellant
Shri Rajesh Chibber, Advocate for the Respondent
CORAM:
Hon'ble Shri Ashok Jindal, Member (Judicial)
Hon'ble Shri B. Ravichandran, Member (Technical)
Date of Hearing: 05.08.2015
FINAL ORDER NO. 52591/2015-EX(DB)
Per B. Ravichandran:
In this case the Revenue is in appeal against the order dated 08.12.2004.
2. The facts of the case in brief are that the Respondent are engaged in the manufacture of Cotton Yarn, Cotton Fibre, MM Yarn and MM Fabric. During the period 01.03.2002 to 31.03.2003 they were availing concessional rate of duty on the processed Cotton Fabric in terms of notification no.14/2002-CE (Sl. No. 4) read with condition No. 5 therein. Since the respondent had manufactured processed cotton fabric from cotton yarn on which no Central Excise duty was paid as per the notification no.22/96-CE, it appeared that the respondent was not eligible for said concessional rate of duty under notification no. 14/2002-CE. In other words, the respondent have not been paid appropriate duty of excise on the inputs. Accordingly, demand cum notice was issued and the case was adjudicated vide the impugned order. The Ld. Commissioner dropped the proceedings against the respondent. Aggrieved by the said order the revenue is in appeal.
3. The Revenue contended that the Ld. Commissioner erred in dropping the demand as the cotton fiber purchased from open market is clearly recognizable as non duty paid and as such the benefit of notification no.14/02 is not available. It was contended that the Ld. Commissioner erred in interpreting the Board Circular dated 10.12.2002. It was also contented that Ld. Commissioner should not have followed the Board Circular dated 10.12.2002 as the proposal for notification under section 11C for the intervening period was rejected by the Board with a direction to the field to finalize the pending assessments.
4. During the hearing the Ld. Counsel for the respondent argued that reasoning and contents of the Board Circular dated 10.12.2002 is squarely applicable to their case. The Boards Circular dated 26.09.2002 which was issued after the Honble Supreme Courts decision in the case of CCE Vadodara Vs. Dhiren Chemicals Industries-2002 (139) ELT (SC) is not applicable to the facts of their case. The exemption under notification no. 22/1996 was conditional and was available only if duty is paid on fabric manufactured out of said yarn. Their case is covered by the decision of the Tribunal in the following cases:
a) Simplex Mills Ltd. Vs. CCE-2005 (189) ELT 228
b) Suditi Industries Ltd. Vs. CCE-2013 (296) ELT 368
c) Arvind Products Ltd. Vs. CCE-2014 (310) ELT 515
5. Further, it was contended that the whole exercise is revenue neutral as duty, if any, paid on yarn is available as credit for fabric.
6. The Ld. AR on the other hand, reiterated the grounds of appeal.
7. Heard both the sides and examined the appeal papers.
8. The Respondents claim for the concession under notification no.14/2002-CE (Sl. N0.4) is in dispute. Availing exemption on the inputs resulting in no payment of duty is considered as violation of the condition that appropriate duty of excise has to be paid on inputs. In other words, when no duty is paid on inputs appropriate duty of excise has not been paid. The ld. Commissioner examined the implication of Honble Supreme Courts order in the case of Dhiren Chemicals Industries (Supra) and subsequent to Board Circular dated 26.09.2002 and also Board Circular dated 10.12.2002. He came to the conclusion that circular dated 10.12.2002 addressed the issue specifically and the earlier circular dated 26.09.2002 was not applicable to the present case. Revenues appeal states that the Ld. Commissioner should not have followed the Boards Circular dated 10.12.2002 only because some proposal for issuing notification under section 11C was rejected by the Board. There is no other mention regarding incorrect interpretation of notification by the said circular. Strangely, in this case the Revenues appeal states that the Ld. Commissioner should not have followed the Boards Circular. We find no infirmity in the reasoning given either in the Boards Circular dated 10.12.2002 or by the Ld. Commissioner in his order. Further, this Tribunal in various cases mentioned supra held that the deeming fiction as per the Explanation II of notification no. 14/2002-CE regarding duty paid either on textile yarns or fabrics have been clearly applicable to the facts of the present case. The Larger Bench of this Tribunal in the case of Arvind Products Ltd. (Supra) held as below:
The decisions taken in the case of Prem Industries, Simplex Mills Co. Ltd. and Morarjee Gokuldas Spg. & Wvg. Co. Ltd. were correct interpretation of exemption notification no.14/2002-CE dated 01.03.2002. Accordingly, benefit of Sr. No. 12 of notification no. 14/2002-CE will be admissible to the appellants by considering the fabric received for processing as deemed duty paid as per Explanation-II of Notification NO. 14/2002-CE. Any other interpretation will make this explanation redundant. Further, such a deemed fiction was not existing before the Honble Supreme Court while delivering judgment in the case of Dhiren Chemicals Ltd.
9. Considering the above discussion we find no merit in the appeal by the Revenue against the order of the lower authorities and as such the appeal is dismissed.
(Dictated and pronounced in the open court)
(B. Ravichandran) (Ashok Jindal) Member (Technical) Member (Judicial)
Bhanu
2
E/216/2006-EX(DB)
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