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2015 (1) TMI 678 - AT - Central Excise100% EOU - Levy of interest on payment of duty made after wrong Availment of exemption under Notification No. 8/97-CE dated 01.03.1997 - Held that:- in respect of wrong availment of Notification No. 8/1997-CE dated 01.03.1997 and Notification No. 15/2012-CE dated 01.03.2012, the appellants admitted the duty liability before the adjudicating authority and paid the duty before issue of show cause notice. They only contended the demand of interest in both the issues and penalty in respect of Notification No. 15/2012. The appellants are liable to pay the interest on demand confirmed and already paid by them on both the issues. However, the penalty imposed on the demand of ₹ 70,204/- is liable to be set aside, as there is no suppression of facts. Non-utilization of yarn received without payment of duty under CT-3 certificate, in the manufacture of Terry Towel - Held that:- while dyeing and bleaching the terry towels, the weight of the finished products gets reduced to the extent of PVA content, which is dissolved in the water. If the above fact has taken into account, the wastage gets reduced to below 25%. We also find that the department has not adduced any findings for removal of excess yarn or excess clearance of yarn or finished goods without payment of duty. - The department accepted the fact that the appellants have used PVA in the manufacture of Terry Towel. We are of the considered view that without producing adequate evidence on the excess utilization of cotton yarn or diversion of yarn, the duty cannot be demanded purely on the input-output norms without any corroborative evidence. We also find that the Board s circular referred above clearly supports that the appellants being 100% EOU, they are allowed wastage upto 25% and in the present case the percentage of waste is well below the prescribed limit after excluding PVA content. Therefore, we hold that the demand of ₹ 48,50,530/- confirmed by the adjudicating authority is set aside. Consequently, the penalty imposed on the appellants and Mr. K. Jayaraj is also liable to be set aside. - Decided partly in favour of appellants.
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