TMI Blog2007 (8) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... processed by the Textile Mill though some quantity thereof is sold to third parties. In this civil appeal, we are concerned with the period 13.3.2002 to 15.9.2002. In this civil appeal, we are not concerned with quantification. That question is even today pending adjudication. 3. At the outset, we quote hereinbelow notification no. 14/2002-CE granting exemption, both full and partial to a range of goods. As stated above, in this civil appeal we are concerned with the item, namely, grey fabrics manufactured by the assessee. In this civil appeal, we are concerned with the interpretation of item 1 and item 2 of the table to the notification. "Notification No.14/2002-CE dated 01-Mar-2002 Processed textile fabrics Effective rate of duty Notification No. 11/2001-C.E. superseded. In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act,1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 11/2001-Central Excise, dated the 1st March, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed to have been duty paid even without production of documents evidencing payment of duty thereon. Explanation III.- For the purposes of the exemption under S.No. 5 of the Table,- (i) the expression "independent processor" means a manufacturer who is engaged exclusively in the processing of fabrics with the aid of power and who has no proprietary interest in any factory engaged in the spinning of yarn of cotton or weaving of cotton fabrics; and (ii) the value of the fabrics shall be equal to 40% of the value determined under section 4 of the Central Excise Act, 1944. Table S.No. Chapter or heading No., or sub- heading No. Description Rate of duty Condition (1) (2) (3) (4) (5) 1 5110.10, 5111.10, 5207.20, 5208.20, 5209.10, 5406.10, 5407.10, 5511.10, 5512.10, 5513.10, 5514.10, 5801.11 or 5802.51 Woven fabrics, not subjected to any process Nil 1 2 5110.10, 5111.10, 5207.20, 5208.20, 5209.10, 5406.10, 5407.10, 5511.10, 5512.10, 5513.10, 5514 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to any process 16% 2 16 6001.12, 6001.22, 6001.92, 6002.10, 6002.20, 6002.30, 6002.43 or 6002.93 Knitted or crocheted fabrics, other than of cotton, subjected to any process 16% 5 Condition No. Conditions (1) (2) 1 If made from textile yarns on which the appropriate duty of excise leviable under the First Schedule or the Second Schedule to the said Central Excise Tariff Act read with any notification for the time being in force or the additional duty of customs leviable under section 3 of the Customs Tariff Act, 1975, as the case may be, has been paid and no credit of the duty paid on inputs or capital goods has been taken under rule 3 or rule 11 of the CENVAT Credit Rules, 2002. 2 If made from textile yarns on which the appropriate duty of excise leviable under the First Schedule or the Second Schedule to the said Central Excise Tariff Act read with any notification for the time being in force or the additional duty of customs leviable under section 3 of the Customs Tariff Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous refund, as the case may be, but for the provisions contained in sub-section (2), or sub-section (2B), of section 11A till the date of payment of such duty: Provided that in such cases where the duty becomes payable consequent to issue of an order, instruction or direction by the Board under section 37B, and such amount of duty payable is voluntarily paid in full, without reserving any right to appeal against such payment at any subsequent stage, within forty-five days from the date of issue of such order, instruction or direction, as the case may be, no interest shall be payable and in other cases the interest shall be payable on the whole of the amount, including the amount already paid."and, Rule 8(3) of the Central Excise Rules, 2002: "If the assessee fails to pay the amount of duty by due date, he shall be liable to pay the outstanding amount along with interest at the rate specified by the Central Government vide notification under section 11AB of the Act on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount." 5. The assessee herein opted for exemption under noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the said notification. Accordingly, the assessee was held liable to pay duty at the rate of 12% under item 2 of the table to notification no. 14/2002-CE and, consequently, a demand was raised for differential duty for the period 13.3.2002 to 15.9.2002 on the ground that the assessee had failed to pay the duty on the yarn at the spindle stage. The demand was confirmed by the Deputy Commissioner. However, in appeal, the Commissioner (A) allowed the assessee the payment of duty on yarn at the time of clearance of grey fabrics instead of payment of duty on yarn at the spindle stage. In this connection, the Commissioner (A) relied upon Trade Notice No. 40/96. This order of the Commissioner (A) has been confirmed by the Tribunal, hence, the Department has come to this Court by way of this civil appeal. 6. Shri Vikas Singh, learned Additional Solicitor General, appearing on behalf of the Department submitted that notification no. 14/2002-CE dated 1.3.2002 is an exemption notification. Learned counsel cited several authorities in support of his contention that the conditions mentioned in the exemption notification should be strictly followed. Learned counsel contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Rules, 2001, which, in turn, were repealed by Central Excise Rules, 2002. Learned counsel pointed out that since we are concerned with the period 13.3.2002 to 15.9.2002 there was no question of invoking Rule 49A of the earlier Rules as the earlier Rules were repealed and substituted by Central Excise Rules, 2002. In other words, according to the learned counsel, it was not open to the Appellate Authority and the Tribunal to rely upon Rule 49A of Central Excise Rules, 1944 read with Trade Notice No. 40/96. According to the learned counsel, Trade Notice No. 40/96 was based on Rule 49A of Central Excise Rules, 1944 under which deferment of duty payable on yarn along with interest could be postponed to the grey fabrics stage. That, since Rule 49A was not applicable once the Central Excise Rules, 2002 came into force, it was not open to the Commissioner (A) as well as the Tribunal to place reliance on Rule 49A of the 1944 Rules read with trade notice no. 40/96. Learned counsel further submitted that the judgment of the Allahabad High Court in the case of Hello Minerals Water (P) Ltd. v. Union of India reported in 2004 (174) E.L.T. 422 was also not applicable to the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spute that duty on yarn became payable at the spindle stage, however, the assessee has deferred the payment to the stage of clearance of grey fabrics and, therefore, it cannot be said that the assessee has not complied with the first condition of item no. 1 to the table attached with the notification. Similarly, learned counsel submitted that the assessee, in the present case, has reversed CENVAT credit and the assessee has not taken credit on account of such reversal. Learned counsel submitted that whenever duty is paid on the input (yarn) the assessee is entitled to credit under the CENVAT Credit Rules, 2002, however, availment of credit takes place later on when the assessee makes adjustments of duty paid on input against duty paid on final product (grey fabrics). In the present case, before the account could be debited and before the assessee could avail of CENVAT credit, the assessee has reversed CENVAT credit which would amount to the assessee not taking credit for duty paid on input (yarn). Learned counsel submitted that the assessee was free to reverse the credit before utilization of such credit. In the circumstances, it was urged that both the conditions of item no. 1 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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