1995 (11) TMI 191 - AT - Central Excise

Summary

Issues:
1. Refund claims for exemption on Woven Sacks.
2. Interpretation of Notfn. No. 223/86 and subsequent notifications.
3. Eligibility for exemption based on manufacturing process.
4. Validity of refund claim and rejection by authorities.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Mumbai involved refund claims by manufacturers of HDPE Sacks seeking exemption on Woven Sacks under Notfn. No. 223/86 and subsequent notifications. The appellants filed two refund claims totaling Rs. 11,67,397.20, which were rejected by the authorities. The Collector (Appeals) upheld the rejection, stating that sacks could only be complete on stitching, thus not directly manufactured on circular looms, making them ineligible for exemption.

In response to the rejection, the appellants clarified that their current claim was restricted to Rs. 3,86,601.75 for duty paid during a specific period. The appellants argued that they did not manufacture sacks on circular looms and thus were eligible for the exemption. They referenced Notfn. No. 57/90, which clarified the interpretation of woven sacks made from fabrics woven on circular looms, indicating their eligibility for exemption.

On the contrary, the JDR contended that sacks could not be manufactured on circular looms without stitching, aligning with the exclusion in Notfn. No. 3/87. Additionally, a subsequent clarificatory notification by the Government further supported the denial of exemption to the appellants.

After considering the arguments and reviewing the relevant notifications, the Tribunal found that Notfn. No. 223/86 granted exemption to all Woven Sacks, but subsequent notifications restricted the exemption for sacks manufactured on flat knitting looms and excluded those made on circular looms. The Tribunal viewed Notfn. No. 57/90 as clarificatory and upheld the authorities' decision to reject the refund claim, as the appellants were manufacturing sacks from fabrics woven on circular looms, rendering them ineligible for exemption. Consequently, the appeal was dismissed, affirming the rejection of the refund claim.