Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2014 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (11) TMI 79 - CESTAT AHMEDABADBenefit of Sr. No. 12 of exemption notification No. 14/2002-CE - processed knitted and crocheted cotton fabrics - appropriate duty has not been paid on the grey fabrics - Held that:- In the present notification, Sr. No. 10 of table annexed to Notification No. 14/2002-CE exempts all goods knitted or crocheted fabrics of cotton subject to the condition that such fabrics is made out of yarn on which appropriate duty is paid and no credit is taken on inputs and capital goods. Similar condition exists in Sr. No. 12 of the same notification. The words like appropriate duty of excise leviable, ‘read with any notification for the time being in force’ ‘duty has been paid’ and ‘no credit of duty paid on inputs or capital goods has been taken’ have been used in condition -3 pertaining to Sr. No. 12 of Notification No. 14/2002-CE. All these expressions have been interpreted by various orders of CESTAT and Courts, including the Apex Court. On top of all this Explanation II of Notification No.14/2002-CE creates a fiction that for the purpose of condition of this notification taxable yarn or fabrics shall be deemed to be duty paid even without production of documents evidencing payment of duty. For a claim under Sr. No. 12 of Notification No.14/2002-CE by an assessee it can not be presumed that all grey cotton fabrics received by a textile processor is not duty paid because Sr. No. 10 of the same notification exists. It is also relevant to note that exemption under Sr. No. 10 of this exemption notification is not unconditional but is subject to certain conditions. Thus, the grey fabrics available in the market may not be 100% grey fabrics on which no duty has been paid. That is why a fiction is created under Explanation-II that for the purpose of condition of this notification textile yarn or fabrics shall be deemed to have duty paid even without production of duty paying documents. There is no expression like, ‘except good which are clearly recognizable as non duty paid’ in Explanation-II of Notification No. 14/2002-CE, to have any doubt. It is evident from the above Explanatory Notes that framers of Notification No.14/2002-CE wanted to extend the benefit of this exemption to the manufacturers subject to the only condition that no cenvat credit is taken/ not taking of such cenvat credit was not only restricted to inputs but was also to capital goods. It is further clarified that benefit of rate of duty should be allowed without insisting upon any documentary proof of payment of duty. In view of the above legislative intent, we do not agree with the views expressed by CESTAT two Member judgment in the case Auro Textile vs. CCE Chandigarh (2009 (11) TMI 447 - CESTAT, NEW DELHI) in Para 25 that reliance of the appellant on Explanatory Notes to Budget of 2002 cannot be of any assistance to the assessee. It has been rightly argued by the Senior Advocate in the present proceedings that if the views of the Revenue are accepted than it will lead to chaos and absurdity because making a manufacturer to pay duty again after breading cenvat chain by not taking credit, will burden small processing manufacturers to pay duty again on the processed fabrics when no credit on inputs is taken. Indirectly all the textile processors will be forced to adopt cenvat credit route only to avoid cascading effect of taxation. It will not be in the interest of Small operators to follow only the cenvat credit mode. Decisions taken in the case of CCE Ludhiana vs. Prem Industries (2009 (5) TMI 193 - CESTAT, NEW DELHI), Simplex Mills Co. Limited vs. CCE (2005 (4) TMI 406 - CESTAT, MUMBAI) and Morarjee Gokuldas Spg. & Wvg. Co. Limited vs. CCE (2005 (5) TMI 170 - CESTAT, MUMBAI) were correct interpretation of exemption Notification No. No.14/2002-CE dated 01.03.2002. Accordingly, benefit of Sr. No. 12 of Notification No. 14/2002-CE will be admissible to the appellants by considering the fabric received for processing as ‘deemed duty paid’ as per Explanation -II of Notification No. 14/2002-CE. Any other interpretation will make this explanation redundant. Further such a deemed fiction was not existing before the Hon'ble Supreme Court while delivering judgment in the case of CCE vs. Dhiren Chemicals Limited (2001 (12) TMI 3 - SUPREME COURT OF INDIA). - Decided in favour of assessee.
|