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2005 (4) TMI 192 - CESTAT, NEW DELHICenvat/Modvat - benefit of deemed credit in terms of Notification No. 53/2001-C.E. (N.T.) - Processing of cotton fabrics and MM Fabrics - excise duty - inputs - additional duty - HELD THAT:- It is not in dispute that the fabrics which is processed by the appellants contain yarn which is declared as inputs in the Notification. This view also gets support from the Budget Speech of the Hon'ble Finance Minister, made at the time of presenting the Budget Speech for 1996-97 wherein it was mentioned that the processors would be in a position to Modvat the duty paid on yarn imputed on the basis that yarn accounts for 50% of the value of the finished fabrics. Finance Minister had adopted a simple procedure of imputed value to avoid the imposition of basic duty on grey fabrics being manufactured by thousands of powerlooms. The Board has also clarified vide Circular No. 243/77/96-CX., dated 3-9-1996 that the rate of deemed credit in case of fabrics is in lieu of duty paid on inputs by the processors. It is not the case of the Revenue that the declared inputs i.e. yarn is not contained in the final products. If the contention of the Revenue is accepted, manufacture other than the composite mill will never be eligible to avail the deemed credit under Notification as they will always be bringing only the fabrics whether cotton or man-made for the purpose of processing and column No. 2 of the Notification does not mention any Heading under which fabrics fall. Further Serial No. 2 as well as Serial No. 3 of the Notification No. 6/2002 will be completely redundant as these Serial Nos. provide the facility of deemed credit to the goods manufactured by a manufacturer other than the composite mill. Following the decision in the case of Kamrup Industrial Gases Ltd. v. CEGAT [2003 (5) TMI 72 - HIGH COURT OF JUDICATURE AT ALLAHABAD], we hold that the appellants herein are eligible for availing the deemed credit under Notification No. 6/2002. Consequently, both the impugned orders are set aside and all the three appeals are allowed.
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