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2018 (10) TMI 1202 - AT - Central ExciseRebate Claim - Duty @ 4% advalorem on cotton yarn - It appeared to the department that N/N. 29/2004 dt. 09.07.2004 prescribing the effective rate of duty of 4% on the said cotton yarn was amended by Notification No.58/2008 dt. 07.12.2008 prescribing the Nil rate - a N/N. 11/2009-CE dt. 07.07.2009 was issued also referring to erstwhile N/N. 29/2004-CE and restore duty of 4% advalorem on cotton yarn. Held that - The issue per se has already been decided in the decision of this very Bench in the case of Ambika Cotton Mills Ltd. 2018 (7) TMI 760 - CESTAT CHENNAI , where it was held that cotton yarn was never an exempted product for the disputed period. Though there were parallel notifications wherein one of the notification prescribed duty at the rate of 4% on cotton yarn, there was another notification 58/2008 dated 7.12.2008 which prescribed nil rate of duty. Thus, on the same date there were two notifications one of which prescribed nil rate of duty and the other prescribed 4% duty - The appellant can opt for a notification which is beneficial to him and the appellant herein has chosen to pay duty at the rate of 4% and claim rebate. Thus, the denial of credit is without any basis and unjustified. So also the denial of rebate claim is also unjustified. The impugned order cannot be sustained and requires to be set aside - Appeal allowed - decided in favor of appellant.
Issues:
- Interpretation of Notification No.59/2008 and Notification No.58/2008 regarding duty on cotton yarn - Eligibility of cenvat credit on capital goods during the disputed period - Validity of show cause notices and penalties imposed Interpretation of Notification No.59/2008 and Notification No.58/2008 regarding duty on cotton yarn: The case involved a dispute regarding the duty rate on cotton yarn exported between 07.08.2008 to 06.07.2009. The department contended that Notification No.29/2004, which prescribed a 4% duty rate, was amended by Notification No.58/2008 to a 'Nil' rate. However, Notification No.59/2008, issued on the same date as No.58/2008, retained the 4% duty rate. The appellants argued that the effective rate of 4% remained constant as per Notification No.11/2009-CE. The Tribunal, citing a previous decision, held that cotton yarn was never fully exempted during the disputed period. The appellants' choice to pay duty at 4% and claim rebate was deemed valid, leading to the allowance of the appeals with consequential relief. Eligibility of cenvat credit on capital goods during the disputed period: The department contended that the cotton yarn was fully exempted during the period, making the cenvat credit on capital goods received in April 2010 ineligible. Show cause notices were issued proposing disallowance of the cenvat credit and penalties. The original authority confirmed the reversal of cenvat credits but dropped the penal proceedings. The Commissioner (Appeals) upheld the original orders. However, the Tribunal, following the precedent set in a previous case involving the same appellants, found the denial of credit without basis and unjustified. The impugned order was set aside, and both appeals were allowed with consequential benefits. Validity of show cause notices and penalties imposed: The show cause notices were issued proposing disallowance of cenvat credit and imposition of penalties under various provisions of law. The original authority confirmed the reversal of credits but dropped the penal proceedings. The Commissioner (Appeals) upheld the original orders. However, the Tribunal found the denial of credit and rebate claim unjustified based on the interpretation of the notifications and previous decisions. Consequently, the impugned order was set aside, and both appeals were allowed with consequential benefits, if any, as per law.
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