TMI Blog2008 (12) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri R.K. Hasija, Advocate, for the Appellant. Shri L.B. Yadav, DR, for the Respondent. [Order per : M. Veeraiyan, Member (T)] - This is an appeal against the order of the Commissioner dated 6.6.2005. 2. Heard both sides. 3. The relevant facts, in brief, are as follows:- (a) The appellant-company is a 100% EOU. They were granted LOP dated 28.1.2003 permitting manufacture of knitted fabrics/ processed dyed or printed fabrics/sarees/dresses/shirting/suiting/furnishing fabrics and made ups and readymade garments. The appellants imported 100% Polyester fabrics falling under Chapter 55 without payment of duty availing the benefit of exemption notification No.54/07 dated 3.6.97. (b) The appellants have cut the fabrics im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sizes and cleared by them with out stitching should be treated as readymade garments. He relies on the HSN Notes relating to Chapter 62, which reads as follows:- "This Chapter also covers un-finished or incomplete articles of the kind described therein, including shaped textile fabric for making such articles and shaped knitted or crocheted fabrics for making articles or parts of articles of Heading No.62.12." (d) Alternatively, even if un-stitched fabrics cannot be treated as readymade garments, the same should be treated as made-ups and for the said proposition, he relies on the clause 7(a) of Section Notes relating to Section XI dealing with Textile and Textile Articles., according to which, made-ups also means "cut otherwise than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EOU/EPZ/EHTP/STP unit without payment of duty. Suitable amendments incorporating specific provisions for such supplies would be made in the Notification No.133/94-Cus, dated 22.06.94 at the appropriate time." (f) The question of demand of duty under the above mentioned circumstances does not arise. Imposition of penalty when the clearances were effected on the basis of CT.-3 Certificate issued by the jurisdictional central excise authorities is not justified. 5. Ld. DR made the following submissions:- (a) The LOP granted specifically mentions the goods, which are required to be manufactured and exported by the appellants. The un-stitched fabrics even if cut to required sizes and shapes cannot be treated as readymade garments. In co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a verification report regarding the factual position to whether the recipient unit has received the materials and used them for further manufacture and whether final products were exported. Ld. DR produced a verification report in pursuance of our directions which reads as follows:- "It is to inform you that M/s. Shrivatsa International Ltd. had sent 06 consignments of unstitched readymade garments to M/s. G. M. Rubber Tech Pvt. Ltd. Distt.24, Pargana, West Bengal, which, falls under the jurisdiction of Central Excise, Barasat Division of Kolkata-III Commissionerate. A report in this regard was called for from them, they reported as under:- This is to report that M/s. G.N. Rubber Tech Pvt. Ltd., Kolkata was a fraud party. There was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not have been physically exported to fulfil the export obligation as per LOP. When that being the case, the supply to another 100% EOU can not qualify as deemed export. 6.3. The claim that the un-stitched fabrics cut to required sizes and shapes should be treated as readymade garments/made-ups based on HSN notes and interpretative rules deserves to be rejected out right. We are not dealing with the assessment of the goods at the time of import. We are dealing with the goods cleared from a 100% EOU and which are claimed to have been manufactured. The cutting to shape may be one of the processes in the manufacture of the readymade garments but this alone will not lead to manufacture of readymade garments. We agree with the submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be treated as ready-made garments/made-ups and therefore, cannot be treated as final product to be manufactured by the 100% EOU and to be exported in terms of LOP. However, the said unstitched fabrics could be treated as clearance of imported materials as such as permitted under condition 7 of the said Notification governing 100% EOU Scheme. Inasmuch as the goods cleared under CT -3 certificate is shown to have been received by the Calcutta based 100% EOU as mentioned in the show cause notice itself, and in the absence of contrary evidence, the goods should be held to have been received by the said unit and action for violation, if any, requires to be taken by the officers in-charge of the recipient unit. In other words the demand of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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