TMI Blog2001 (10) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... Tyre Yarn/Cord/Wrap without payment of duty under Rule 191BB of the C.E. Rules, 1944 from the appellants herein by the Assistant Commissioner. The Assistant Commissioner, Central Excise, Madras III Division also permitted the appellants to clear Nylon Tyre Yarn/Warp sheet (fabric) under rule 191BB without payment of duty vide C. No. IV/16/3/94-T (FS), dated 13-1-94. The appellants were clearing the above said goods without payment of duty in terms of the above order. The appellants submitted that the Assistant Commissioner Chennai III Division issued a show cause notice vide C. No. IV/16/118/94 Adj., dated 10-8-94 demanding duty on Nylon Yarn to the tune of Rs. 59,44,529/-, on the ground that during the course of manufacture of Nylon Tyre cord fabrics, intermediate goods emerge viz. Nylon Tyre yarn which is not exempted from payment of duty either under the Notification for captive consumption or under any other provisions of the Central Excise Rules. Appellants had filed detailed reply dated 21-10-94 assailing the allegations contained in the show cause notice. The Commissioner Central Excise, Madras passed the order in original No. 13/97, dated 29-4-97 confirming the duty of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that such clearances for export without payment of duty did not attract Clause (i) of the proviso to sub-rule (2) of Rule 56A which made proforma credit inapplicable in cases where the finished products are either exempted from the whole of duty or are chargeable to nil rate of duty. Para 6 of the letter F. No. 211/d2/73-CX. 6, dated 3-4-1975 (Circular No. 10/75-CX. 6) issued by the Ministry is extracted below :- 6. The first point viz. whether the goods manufactured under Rule 56A ibid and exported in bond could be treated as exempted from payment of duty or chargeable to nil rate of duty was referred to the Ministry of Law who have advised that the goods exported in bond in such cases cannot be treated either as exempted from payment of duty or chargeable to nil rate of duty. Consequently, the provisions of clause (i) of the first proviso to sub-rule (2) of Rule 56A ibid would not apply to those cases where finished excisable goods are exported in bond. An extract of the advice of the Ministry of Law, Justice and Company Affairs is appended. The provision so interpreted is similar to Rule 57C with which we are concerned and the instruction will apply equally well to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule. As correctly pointed out by the learned Consultant, removals to units in Export Promotion Zone and 100 per cent export-oriented Units are exempted from duty and as such they had to be specifically provided for to escape the rigour of Rule 57C. Removals without payment of duty, on the strength of a Notification (not being an exemption Notification) not being construable as exempt from the whole of duty or chargeable to nil rate of duty, there was no need for their specific mention in the parenthetic exclusion in Rule 57C a la clearances to units in Free Trade Zone or to a 100 per cent Export Oriented Unit. 9. The interpretation adopted by us fully in line with the authoritative pronouncement of the Honourable Delhi High Court as well as the Circular instructions of the Ministry of Finance themselves would also avoid anomaly which will arise if the benefit is denied to goods cleared for export either directly or eventually after further manufacture. This is because the relevant Notification permitting removal without payment of duty does not confer any greater benefit than what would be derived by the concerned manufacturers if they clear the goods on payment of duty, except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are chargeable to nil rate of duty. They have further submitted that similar issue was considered by this Tribunal in their own case reported 2000 (36) RLT (936) in the context of Modvat credit and in the light of this judgment also, the order of the Commissioner (Appeals) is liable to be set aside. They have further submitted that Rule 191BB of the C.E. Rules, 1944, enables the exporter to obtain intermediate goods without payment of duty of excise and raw material could also be imported and supplied to manufacturers of intermediate products. The whole procedure has been devised to facilitate and encourage export of goods. They have also invited our attention to the Ministry s letter MF (DR) letter F. No. 209/57/57/88-CX. 6, dated 7-2-99 wherein it has been clarified that any raw material ibid can be brought without payment payment of duty under Rule 191B and the said final product can be permitted to be used for manufacture of any other final product, if both these products are notified. This procedure can be continued till the ultimate product manufactured is exported and therefore no duty is payable on the intermediate product. They have also submitted that the clarificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cleared without payment of duty under Rule 191BB read with Notification No. 33/90. Notification No. 33/90 issued under Rule 191BB refers that the Central Government hereby specifies all excisable goods (hereafter in this notification referred to as intermediate goods ) as goods whose removal from the place of manufacture shall be permitted without payment of duty for supply to manufacturers of all articles (hereafter in this notification referred to as the resultant articles ). Condition (ii) of the notification stipulates that the intermediate goods are supplied against an Advance Release Order to an ultimate exporter for use in the manufacture of resultant articles . The Notification is explicitly clear that intermediate goods should be removed from the place of manufacturer for supply to manufacturer of resultant articles. What has been cleared as intermediate goods without payment of duty by SRF to MRF was nylon fabrics and not nylon yarn which was captively consumed in the manufacture of such nylon fabrics. Therefore, nylon yarn not being removed from the place of manufacturer for supply to manufacturer of resultant articles cannot be taken as intermediate goods within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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