TMI Blog2015 (1) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - E/293 - 294/2006 - FINAL ORDER No. 40878-40879 / 2014 - Dated:- 2-12-2014 - SHRI P.K. DAS AND SHRI R. PER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only the demand of interest under Section 11 AB of the CEA, 1944. Since they paid the duty before the issue of show cause notice, the interest is not liable to be paid. He relied upon the following decisions in support of his contention: 1. Karnataka Soaps Detergents Ltd. Vs. CCE, Bang. 2005 (190) ELT 103 (Tri.-Bang.) 2. Jindal Vijayanagar Steel Ltd. Vs. CC, Mangalore 2004 (177) ELT 937 (Tri.-Bang.) 3. Ashok Leyland Ltd. Vs. CCE, Chennai 2003(156) ELT 995 (Tri.-Chen.) 3. Regarding the second issue of wrong availment of Notification No. 15/2002-CE dated 01.03.2002, he submits that the appellants have duly intimated the department on the availment of notification and indicated the Notification No. 15/2002-CE dated 01.03.2002 in all the invoices. The department should have denied the exemption at the time of submission of invoices. Therefore, there is no suppression of facts. He also submits that they have already paid an amount of ₹ 68.300/- out of the total demand. There is no intention to evade payment of duty and the department was aware of the facts of this issue and hence there is no justification for invoking the extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .-Del.) 6. On the other hand, the Ld. AR on behalf of the Revenue reiterates the findings of the adjudicating authority and submits that regarding wrong availment of exemption Notification No. 8/97, the interest is mandatory and rightly demanded. Payment of duty before the issue of show cause notice cannot be a reason for not demanding the interest. Once, duty is payable, interest becomes mandatory. He relied upon the following decision in the case of Alembic Ltd. Vs. CCE,Vadodara - 2013 (295) ELT 535 (Tri.-LB), in support of his argument. 7. Regarding the second allegation in respect of wrong availment of Notification No. 15/2002, since the appellants have admitted the demand and also paid the duty, they are liable to pay the interest and liable for penalty. He relied upon the decision in the case of Paras Fab International Vs. CCE,Jaipur - 2009 (239) ELT 176 (Tri.-Del.) in this regard. 8. Regarding the major demand relating to violation of input-output norms, he submits that since 100% EOUs are governed under import-export policy and they are duly covered by the standard input-output norms. Notification No. 1/1995 dated 04.01.2005 permits the EOUs to procure raw material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th export item 100% cotton terry towel bleached/dyed. For one kg. of export product, the items allowed to be imported are: 1. 100% cotton/combed yarn 1.1 kg. 2. Hydrogen Peroxide 0.02 kg. 3. softening agent 0.01 kg 4. reactive or direct or vat or sulphur dyes of 100% strength 0.015 kg. 5. optical whitening agent of 100% strength 0.005 kg (items-iii) and 6. will be allowed only against export of dyed terry towel. Since the norms have already been fixed for cotton terry towels as per the import-export policy applicable to duty exemption scheme, it appeared that the said norms are applicable to EOU also. There is no change in the norms as per the Policy for the year AM 2002-2007. 5.5. In the case of STPL, the usage of cotton yarn in relation to their end products, namely, cotton terry towels appeared to increase year after year showing increase in the usage of cotton yarn for the manufacture of same unit of terry towel, as could be seen from consumption pattern shown in their books of accounts for the period from 1999 to 2003, which is furnished below:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% EOUs. It has now been decided that the percentage of scrap or waste material shall be either as per the norms in Annexure-V to Appendix-19 of the Import-Export Policy, 1985-86, subject to a maximum of 25%. In case the quantity of waste/scrap exceeds 25% an amount equal to the duty leviable on mother material, out of which the scrap or waste has arisen, shall be charged on the excess quantity of scrap/waste under the proviso to Section 3 of the Central Excise Salt Act, 1944. The Board has specified that the percentage of waste material shall be either as per the norms of SION, subject to maximum of 25%. The Board has clearly spelt out that if the waste exceeds 25% an amount equal to the duty leviable on the raw material on the excess quantity of waste. If the PVA content is excluded from the final product as it gets dissolved the consumption and production of terry towel as worked out by the appellant, is as under:- Sl.No Year Actual consumption of yarn (in Kgs.) Towel prodn. % of prodn. Compared to consumption of yarn 1 2000-01 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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