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2016 (1) TMI 203 - CESTAT MUMBAI

2016 (1) TMI 203 - CESTAT MUMBAI - TMI - Cenvat Credit - Export of exempted goods - Manufacture and Export of grey fabrics without payment of duty - Appellant did not execute any bond for export of the grey fabrics as required on an understanding that the clearances were exempted from payment of duty - appellant was issued a show-cause notice for demand of 5% or 10% of the value of goods cleared for export, which were exempted since no separate accounts were maintained - Held that:- refund of in .....

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dt. (AR) ORDER Per: M.V. Ravindran This appeal is directed against order-in-appeal BR(2735)117/M.I./2005 dated 18.04.2005. 2. Brief facts of the case are that the appellant was a composite mill engaged in the manufacture of yarn and grey fabrics; entire production of grey fabrics was exclusively for export and only marginal quantity of the production was removed to their multi locational unit and local sales. Appellant used to procure duty paid yarn produced locally and were using the same for t .....

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nd of 5% or 10% of the value of goods cleared for export, which were exempted. Appellant resisted the show-cause notice. Adjudicating authority after following due process of law, confirmed the demands along with interest and imposed penalties. Appeal preferred against such an order also met with the same fate. 3. Learned Counsel after taking us through the Notification No.05/98 and the entire case records submits that by the said Notification, the grey fabrics were exempted from payment of duty .....

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ntral Excise Rules, 1944 would be applicable. He would then takes us through the provisions of Rule 57CC and more specifically to the sub-rules (3) and (5) and submits that they have complied with the conditions of the Rule 57CC in toto. He would submit that despite this, the first appellate authority has held that appellant is required to pay 5% or 10% as the case may be as the goods cleared for export were exempted and they had availed CENVAT credit on yarn procured locally. 4. Learned D.R. wo .....

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re amount of CENVAT credit and the extended period was correctly invoked. 5. We have considered the submissions made at length by both sides and perused the records. 6. The issue involved in this case is whether the appellant has correctly availed the CENVAT credit on yarn which was purchased locally on payment of duty or otherwise; that whether the appellant is required to be directed to pay an amount which is equal to 5% or 10% of the value of the finished goods which were exempted and cleared .....

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fabrics needs to be reversed along with interest and penalties needs to be imposed or discharge 5% or 10% of the value of finished goods. 6.2 At the outset we find that both the lower authorities as well as the learned D.R. are incorrect in their submissions and the findings for more than one reason. 6.3 Firstly, the provisions of Rule 49A of Central Excise Rules, 1944 talks about discharge of duty liability on the yarn manufactured within the factory and consumed in the manufacturing of grey f .....

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on the ground that the yarn which is procured is used for grey fabrics which is exempted. We find that the appellant has used locally procured yarn as well as in-house manufactured yarn for manufacturing of grey fabrics which are either exported or consumed in their own sister unit. If that be so when the clearances are effected to the sister unit appellant availed the benefits of Notification 05/98-CE and paying concessional rate of duty of 5%, hence it cannot be said that appellant had manufa .....

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of excise leviable there on or is chargeable to nil rate of duty) and the manufacturer takes credit of the specified duty on any inputs (other than inputs used as fuel) which is used or ordinarily used in or in relation to the manufacture of both the aforesaid categories of final products, whether directly or indirectly and whether contained in the said final products or not, the manufacturer shall, unless the provisions of sub-rule (9) are complied with, pay an amount equal to eight per cent. O .....

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sub-rule (1), the manufacturer shall pay an amount equivalent to the credit of duty attributable to inputs contained in such final products at the time of their clearance from the factory. (9) In respect of inputs (other than inputs used as fuel) which are used in or in relation to the manufacture of any goods, which are exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty, the manufacturer shall maintain separate inventory and accounts of the receipt an .....

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ule (5) wherein it is very clearly stated that manufacturer shall pay an amount equivalent to the credit of duty attributable to inputs contained in such final products at the time of their clearance from the factory. In the case in hand there is no dispute as to the fact that the appellant had paid duty on grey fabrics cleared to home consumption and when the grey fabrics are cleared for export which consumed yarn, they paid the duty as per the provisions of Rule 49A of Central Excise Rules, 19 .....

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