1999 (11) TMI 262 - AT - Central Excise

Summary

Issues:
1. Demand of Central Excise Duty (CED) and personal penalty imposition.
2. Interpretation of Notification No. 1/93 regarding exemption limit for Narrow Woven Fabrics.
3. Correct application of Explanation VI to Notification No. 1/93 for computing aggregate value of clearances.
4. Reversal of Modvat credit on Polyester Monofilament Yarn and Polyester Filament Yarn used in manufacturing.

Detailed Analysis:
1. The judgment addressed the confirmation of a CED demand and imposition of a personal penalty by the Commissioner. The appellants, engaged in manufacturing Slide Fasteners, were accused of exceeding the permissible exemption limit under Notification No. 1/93. The Department alleged that the appellants cleared Narrow Woven Fabrics without paying duty, used them for captive consumption in Zip Rolls, and did not follow excise formalities. A show cause notice was issued, and the appellants defended by citing the duty exemption limit and relevant case law. The Commissioner upheld the demand and penalty.

2. The main issue revolved around the correct interpretation of Notification No. 1/93 regarding the exemption limit for Narrow Woven Fabrics. The appellants argued that the value of clearances should consider Explanation VI, which excludes certain goods if used for further manufacturing within the factory. They contended that the fabrics used for Zip fasteners were entitled to this exemption, bringing their clearances below the Rs. 30 lakhs limit. The Tribunal agreed, stating that the appellants were within the exemption limit and thus set aside the duty demand and penalty.

3. The judgment emphasized the application of Explanation VI to Notification No. 1/93 in computing the aggregate value of clearances. It was noted that both inputs and final products were exempt during the relevant period, entitling the Narrow Woven Fabrics used for manufacturing to the benefit of this explanation. By excluding clearances for captive consumption, the appellants fell within the exemption limit, leading to the dismissal of the duty demand and penalty imposition.

4. Additionally, the judgment highlighted the need to reverse Modvat credit on Polyester Monofilament Yarn and Polyester Filament Yarn used in manufacturing, as per Rule 57-C. Despite allowing the appeal based on the correct interpretation of the exemption limit, the Tribunal mandated the reversal of Modvat credit on specific yarns used in production. The appeal was ultimately allowed on these terms, overturning the duty demand and penalty while addressing the Modvat credit reversal requirement.