TMI Blog2019 (1) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... hat If the manufacturer had not taken any credit on his pre-budget stock of inputs, he can clear the finished products without payment of duty under Notification No. 30/2004-C.E., dated 9-7-2004. The appellants submitted that they have been reversing credit taken at the time of clearance. We also find that as submitted by the appellants this bench has opined that reversal of credit taken and attributable to goods cleared by availing the benefit of the said Notification No. 30/2004, before clearance would satisfy the condition of nan availment of credit as per the Notification. When a further circular dated 1-2-2007 was issued the appellants started following the new procedure. Therefore, we do not find any infirmity in the procedure availed by the appellants and hold that the benefit of the Notification was correctly availed. The issue of eligibility of Notifications No. 29&30/2004 have been discussed at length by the Bombay High Court in the case of Raymond Ltd. [ 2009 (6) TMI 5 - BOMBAY HIGH COURT], where it was held that the term ‘staple fibres’ at Sr. No.10 of Notification No. 30/04 applies to duty paid inputs falling under Heading 55.01 to 55.04 of the CET which are u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the appellants; he imposed penalty under Section 11AC of the Central Excise Act to the extent of ₹ 2,49,62,672/- and further penalty of ₹ 10,000/- under Rule 25 of the Central Excise Rules, 2002 and he appropriated the amount, deposited under protest, of ₹ 81,04,284 towards duty and ₹ 12,54,441 towards interest. 2. Ld. Counsel for the appellants submitted that though the Appellant herein was simultaneously availing the benefit of both the Notification Nos.29/2004-CE 30/2004-CE and had taken initially CENVAT Credit on all eligible inputs, still was retaining only the eligible credit to the extent of the inputs used in the manufacture of final products cleared essentially for exports, on payment of duty under Notification No.29/2004-CE and was consequently computing and reversing the credit availed to the extent of the said inputs used in the manufacture and clearance of the final products covered under the said Notification No.30/2004-CE, even prior to the clearance of the said final products thereto, as per the procedures prescribed at that time i.e., during July 2004, particularly by CBEC Circular dated 28/07/2004. The issue was earlier agitated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conditions prescribed therein including the discharging of the obligation prescribed under Rule 6 of the CENVAT Credit Rules, have been complied with in full, in as much as the said polyester tops have been used commonly in the manufacture of both dutiable and exempted final products and the credits involved having been retained only to the extent of the said inputs having been used in the manufacture of dutiable final products thereof. However, Show Cause Notice, dated 09/03/2009, came to be issued alleging, inter alia, that the Appellant is liable to pay duty on the said polyester tops captively consumed and used in the manufacture of final products which are cleared by availing the benefit of the said Notification No.30/2004-CE and that the benefit of the said Notification No.67/95-CE cannot be extended since the Appellant herein has not fulfilled the conditions prescribed therein and further even the benefit of Sl.No.10 of Notification No.30/2004-CE, cannot also be extended in as much as the Appellant herein has procured and used only polyester tows and not polyester staple fibre. Further, periodical Show Cause Notices covering the subsequent periods from July 2004 to Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Notification No.30/2004-CE, is that polyester tow falling under heading 5501 cannot be considered as polyester staple fibre contrary to the findings of Hon ble Bombay High Court in paragraphs 58 59 of the order. A reading of the above judgment particularly from paragraph 38 onwards would show that it is fully applicable to the facts of the appellant. The decision Hon ble Bombay High Court has been further followed by the Hon ble Tribunal inter alia in the subsequent decision rendered in the case of Raymond Ltd. Vs. CCE reported in 2010 (260) ELT 279 (Tri-Mum.). In view of the fact that there are no contrary judgements the ratio of Hon ble Bombay High Court needs to be followed, as a binding precedent, in view of the following cases: i. J.K. Tyre Industries Ltd Vs ACCE 2016 (340) ELT 193 [Tri-LB] ii. CCE Vs Kashmir Conductors 1997 (96) ELT 257 [Tri-5Mem. LB] iii. Khanbhai Esoofbhai Vs CCE 1999 (107) ELT 557 [Tri-5Mem. LB] 2.5. Ld. Counsel further submitted that benefit of Notification No.67/95-CE, has also been erroneously denied, in view of the following. i. The Appellant herein has fulfilled the conditions prescribed in clause (vi) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 (Tri-Ahmd) held that benefit of any eligible notification can be claimed at any stage thereof. v. For the period from July 2004 to February 2007, credit on all inputs were availed and later on credit was reversed before effecting clearance in respect of the exempted final products cleared by availing the nil rate of duty exemption under the said Notification No.30/2004-CE and followed Circular dated 01/02/2007. This would satisfy fully and completely the said Condition No. (vi) of the Notification No.67/95-CE thereto. Therefore, the findings of commissioner, at lease for the period up to Feb, 2007 are incorrect. vi. Similarly, even for the period from March 2007 onwards and up to March 2009, the said benefit cannot be denied since the requirements as contained in Rule 6(1) of the Cenvat Credit Rules, read with the said Circular dated 01/02/2007 having been followed in toto, in as much as no credit has been taken or availed on the inputs used for manufacture and clearance of exempted products, in terms of the said Notification No.30/2004-CE. Credit has been taken for the products cleared on payment of duty in terms of Notification No.29/2004-CE thereto. vii. Moreover, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise specified thereon under the First Schedule (hereinafter referred to as the First Schedule) to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table. Explanation. - For the purposes of this notification, the rates specified in columns (4) of the said Table are ad valorem rates, unless otherwise specified. S. No. Chapter or heading No. or sub-heading No. Description of goods Rate under the First Schedule (1) (2) (3) (4) 1 5004.19 All goods 8% 2 51.05, 5106.11, 5106.12, 5106.13, 5107.11, 5107.12, 51.08, 51.09, 51.10, 51.11, 51.12 All goods 8% 3 52.04, 5205.11, 5205.19, 5206.11, 5206.12, 52.07, 52.08, 52.09 All goods (i) of cotton, not containing any other textile material (ii) others 4% 8% 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57 (58 of 1957) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 7/2003-Central Excise dated the 1st March 2003, published in the Gazette of India vide number G.S.R. 137(E), dated 1st March 2003, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in column (3) of the Table below and falling within the Chapter, heading No. or sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), specified in the corresponding entry in column (2) of the said Table, from whole of the duty of excise leviable thereon under the said Central Excise Act : Provided that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs or capital goods has been taken under the provisions of the CENVAT Credit Rules, 2002, - S. No. Chapter or heading No. or sub-heading No. Description of goods (1) (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of natural organic polymers (for example cellulose, casein, proteins or algae), such as viscose rayon, cellulose acetate, cupro or alginates. 9. 55.08, 55.09, 55.10, 55.11, 55.12, 55.13, 55.14 All goods 10. 55.06, 55.07 Staple fibres procured from outside and subjected to carding, combing or any other process required for spinning, by a manufacturer who does not have the facilities in his factory (including plant and equipment) for producing goods of heading Nos. 55.01, 55.02, 55.03 and 55.04. 11. 56 (except 5601.10, 5607.10, 5608.11) All goods 12. 5702.19, 5703.90 All goods 13. 58 (except 5804.90, 5805.90, 58.07, 5808.10) All goods 14. 59 (except 5907.30) All goods 15. 60 All goods 16. 61, 62, 63 (5.3. Notification No. 12/2009-C.E., dated 7-7-2009 Capital goods and inputs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. He can continue to pay duty on the finished goods made therefrom, at post budget rates i.e. 4% for cotton and 8% for others. Alternatively, he can reverse the credit amount and avail of full exemption on the finished goods. The appellants submitted that they have been reversing credit taken at the time of clearance. We also find that as submitted by the appellants this bench has opined that reversal of credit taken and attributable to goods cleared by availing the benefit of the said Notification No. 30/2004, before clearance would satisfy the condition of nan availment of credit as per the Notification. When a further circular dated 1-2-2007 was issued the appellants started following the new procedure. Therefore, we do not find any infirmity in the procedure availed by the appellants and hold that the benefit of the Notification was correctly availed. In the case of Forbes Gokak Mills Limited 2007 (208) E.L.T. 521 (Tri. - Bang.) this bench observed that Even though the appellants have not maintained separate accounts, they have reversed the credit taken and attributable to the goods cleared free of duty before the removal of the goods from the factory. The Chandrapur case is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e denied to the petitioners on the ground that the Notification No. 30/04 uses the term staple fibre and therefore, the exemption is available only if the tops are manufactured from duty paid staple fibres falling under Heading 55.03. As the petitioners have used synthetic filament tow falling under Heading 55.01 as inputs in the manufacture of Tops, it is contended by the revenue that the exemption is wrongly availed by the petitioners. 49. We see no merit in the above contention. The term staple fibres at Serial No. 10 in the Notification No. 30/04 merely denotes the inputs used in the manufacture of processed staple fibres/Tops (55.06/55.07). As noted earlier, the inputs used in the manufacture of Tops are Tow of a length exceeding 2 metres (55.01/55.02) or Tow of a length less than 2 metres (55.03/55.04). As per the new tax regime, if 16% excise duty paid tow , whether falling under Heading 55.01/55.02 or 55.03/55.04 are used as inputs in the manufacture of Tops (55.06/55.07), then no excise duty is payable on clearance of Tops (55.06/55.07). Therefore, in the context of the new tax regime, the term staple fibres in the Notification No. 30/04 merely denotes the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e implementation of the new tax regime so that the manufacturers are required to pay only the mandatory excise duty and not required to pay excise duty at different stages specified in the CET. Therefore, there is no reason to construe the terms staple fibre narrowly so as to restrict it to unprocessed staple fibres used as inputs in the manufacture of Tops. 52. Conventionally tow of a length not exceeding 2 metres also known as unprocessed staple fibre (55.03/55.04) was subjected to the process of carding and combing to obtain Tops/processed staple fibre (55.06/55.07). Under the advanced method Tow (55.01/55.02) of a length exceeding 2 metres is subjected to Tow to Top process to obtain Tops/processed staple fibre (55.06/55.07). If Tops (55.06/55.07) processed from duty paid tow of a length not exceeding 2 metres (55.03/55.04) is exempted from payment of excise duty then in the absence of any intention to the contrary, there is no reason as to why the exemption be denied where tops are manufactured from duty paid tow of a length exceeding 2 metres (55.01/55.02). By choosing a general term staple fibre instead of choosing a specific term like unprocessed staple fibre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on No. 30/04. To prevent any such evasion, the legislature has provided that the manufacturer of goods falling under Heading 55.06/55.07 must procure inputs falling under Headings 55.01 to 55.04 from outside and must not have the facility to manufacture inputs falling under 55.01 to 55.04, so as ensure that duty paid inputs are used in the manufacture of Tops. 5.5. In view of the above decision, we find that the appellant s contentions are correct and as they have procured duty paid tow, no duty is payable on the final products in view of the judgments cited above. We find that the contention of the OIO that as the appeal filed against said order of High Court, Mumbai is pending in Supreme Court, it has not reached finality. We find that Revenue has not produced Stay, if any, granted by the Hon ble Supreme Court in this regard. Therefore, till such time, the decision is overturned the decision of Mumbai High Court request to be followed and is binding on quasi-judicial authorities. 6. The appellants have also submitted that they are eligible for the Notification No. 67/95. They submitted that for the period July2004 to February 2007, they have availed credit on all the input ..... X X X X Extracts X X X X X X X X Extracts X X X X
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