TMI Blog2001 (9) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... n, mono filament, tapes or strips, on which the appropriate duty of excise leviable under the Central Excise Tariff or as the case may be, the additional duty of customs leviable under Section 3 of the Customs Tariff Act, 1975, had already been paid. It was alleged in the show cause notice dated 3-11-98 issued by the Dy. Commissioner of Central Excise, Chandigarh-II, that M/s. PFL wilfully mis-stated and suppressed the facts during the period April, 1998 to July, 1998 inasmuch as, the cotton yarn manufactured and captively used was not duty paid although it was declared that their final product cabled yarn was manufactured out of the duty paid yarn. In the second show cause notice dated 12-11-99, issued by the Commissioner of Central Excise, Chandigarh-II, similar allegations were made for the period June, 1995 to March, 1998. It was alleged that the cotton yarn was manufactured by M/s. PFL themselves in their factory and was used in the manufacture of cabled yarn, without having paid the central excise duty leviable on such cotton yarn. As no central excise duty had been paid on the cotton yarn, it was alleged that the benefit of the aforesaid notifications had been availed of thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department. As the appellants were otherwise eligible for the benefit of Modvat credit, there could be no ground for them to suppress any fact. According to the appellants, the material used by them was not a marketable cotton yarn and they were under the bona fide belief that no duty was leviable on such intermediate non-marketable product. The material was used captively and was consumed in the manufacture of their finished cabled yarn, which had been properly described in the various classification lists/declarations. According to the ld. Advocate, there was no justification for invoking the extended period of limitation as all the facts were within the knowledge of the Department. The ld. Advocate argued that if their product captively consumed is treated as a dutiable cotton yarn then the appellants be charged to appropriate central excise duty on the cotton yarn and the benefit of aforesaid notifications be extended. It was argued that there could be no justification for imposition of any penalty or demanding any interest. The ld. Advocate relied upon the Tribunal's decision in the case of Shivalik Agro Poly Products Ltd. v. Commissioner of Central Excise, Chandigarh [199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he noticee is liable to pay duty leviable on the goods. On the other hand if it is the cotton yarn as declared by the party in their 173-B declarations, then they have been mis-declaring the position of use of duty paid input materials. I find the noticee is doing so with clear intent to evade the payment of duty of excise. Therefore, the allegations of suppression and mis-statement levelled in the show cause notice stand established." 4. The appellants have contended that their classification lists/declarations with exempted rate had been duly approved by the jurisdictional central excise authorities. They had referred to their classification lists/declarations effective from 31-3-95, 16-3-95, 1-4-95, 1-5-95 and the subsequent declarations covering the entire period of the two show cause notices. They had pleaded that the material used was not cotton yarn but cotton in the form of roving (sliver) on bobbins and no cotton yarn as such emerged in the process of manufacture adopted by them. No duty was chargeable on the cotton in the form of roving (sliver) on bobbins. Such intermediate material was not goods and was not marketable. These contentions were urged by M/s. PFL in their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in their approved classification lists/declarations, their final product cabled yarn had been described and the benefit of aforesaid notifications had been claimed. The description also find mention in their RT-12 Returns. Further, it is also a fact that Modvat credit was available even otherwise on the material used in the manufacture of cabled yarn. The appellants had pleaded that the applicable duty be charged on the cotton yarn captively used by them and then the benefit of exemption be extended. We find that the ld. Commissioner of Central Excise, who had adjudicated the matter had not rebutted this plea of the appellants. 6. We have given our careful consideration to this pleading of the appellants. While on the one hand, we are of the view that in the facts and circumstances of the case, the allegation of suppression on the part of the appellants is not substantiated, on the other hand, we consider that the plea of the appellants for charging duty on the cotton yarn and then extending the benefit of aforesaid notifications is also valid and legal. The declarations filed by them from time to time find mention in the show cause notices and had been referred to in the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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