1990 (8) TMI 256 - AT - Central Excise

Summary

Issues:
- Short levy of duty on yarn in cotton fabrics
- Validity of show cause notices under Rule 10 of the Central Excise Rules
- Relevance of duty payable on yarn in the assessable value of fabric

Analysis:

The judgment by the Appellate Tribunal CEGAT, New Delhi, involved three appeals concerning the short levy of duty on yarn in cotton fabrics by composite mills. The appellants contended that they were paying duty based on approved price lists and argued that without modifying or revising the lists, no notice demanding short levy of duty on yarn could be issued. They also raised concerns regarding the deletion of Rule 10 and the inclusion of duty payable on yarn in the fabric's assessable value.

The Department argued that demands could be raised even after price lists were approved, citing Section 11A of the Central Excises & Salt Act. They also contended that the repeal of Rule 10 did not affect ongoing proceedings and that duty on yarn must be included in the fabric's assessable value, as per previous tribunal decisions.

The Tribunal addressed each contention raised by the appellants. They noted that the approved price lists did not include duty on yarn, and no modifications were made as required by law. Citing a Supreme Court judgment, the Tribunal held that demands for duty short-levied could not be enforced as long as the approved price lists were in force.

Regarding the repeal of Rule 10, the Tribunal clarified that proceedings initiated before the rule's repeal could continue, but notices issued after the repeal were not valid. Additionally, the Tribunal affirmed that duty payable on yarn should be included in the fabric's assessable value, even if collected at one stage, based on previous tribunal rulings.

Ultimately, the Tribunal allowed the appeals, setting aside the demands for short levy of duty on yarn in cotton fabrics. The decision was based on the principles outlined in the Supreme Court judgment referenced earlier. The Tribunal emphasized that while duty on yarn should be included in the assessable value of fabrics, the demands in question could not be enforced.

In conclusion, the Tribunal ruled in favor of the appellants, highlighting the importance of adhering to approved price lists, the impact of rule repeals on ongoing proceedings, and the necessity of including duty payable on yarn in the fabric's assessable value.