TMI Blog2009 (2) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... of Excise (GSI) Act, read with any exemption notification for the time being in force has been paid. Since prima facie the terry towels have not been made from the textile fabrics on which Central Excise Duty has been paid, the condition for exemption is not satisfied. – Exemption is not available - Board’s circular No. 125/36/95-CX., dt. 15-5-95 and 667/58/02-CX., dt. 26-9-02 - E/4310 and 4965/2004 - 95-96/2009-EX(PB), - Dated:- 2-2-2009 - S/Shri D.N. Panda, Member (J) and Rakesh Kumar, Member (T) S/Shri C. Hari Shankar with Pushkar and R. Krishnan, Advocates, for the Appellant. Shri V. Chaudhary, Jt. CDR, for the Respondent. [Order per : Rakesh Kumar, Member (T)].- This is a common order in respect of Appeal No. E/4310/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concessional rate prescribed under this notification is the duty of exercise leviable under Section 3 of Central Excise Act, 1944 on the like goods produced or manufactured in India, other than in a 100% EOU or a free trade zone. In other words when the 100% EOU manufactures its finished products wholly out of indigenous raw materials, the DTA clearance of such goods, if made as per the EXIM Policy, would attract duly at the same rate at which such goods produced by a unit in DTA would suffer the Central Excise Duty. In these cases, there is no dispute about the fact that both the Appellants were eligible for Notification No. 8/97-C.E. The point of dispute is as to what would be the effective rate i.e. whether the Appellants are eligible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to as VTI) confirmed the duty demand of Rs. 29,20,088/- and Rs. 8,66,457/- respectively along with interest under Section 11AB for the periods from 11-3-02 to 31-12-02 and March '02 to Feb '03 respectively and imposed penalties of Rs.10 lakhs and Rs. 90,000/- respectively on them under Rule 25(1) of Central Excise Rules, 2002. The Commissioner (Appeals) vide the impugned order upheld the duty demands but set aside the penalties. 3. Heard both sides. 3.1 Shri C. Hari Shanker, Advocate representing PFI and Shri R. Krishnan, Advocate representing VTI made the following submissions: (1) As per explanation to Notification No.15/02-C.E. for the purpose of conditions for concessional rate of duty specified in the notification, text ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on the judgment of the Supreme Court in the case of Nahar Industrial Enterprises Ltd. v. UOI reported in 2004 (170) E.L.T. 518 (S.C.). (4) The Appellants also rely upon Hon'ble Gujarat High Court's judgment in the case of Lucky Star International v. UOI reported in 2001 (134) E.L.T. 26 (Gujarat). 3.2 Shri V. Choudhary, Jt. CDR, the learned Departmental Representative pleaded that since the Appellants do not manufacture terry towels out of duty paid fabrics, they do not satisfy the condition for duty exemption under Notification No. 15/02-C.E., that the explanation to this Notification and the Board's Circular No.125/36/95-CX, dt. 15-5-95 is meant for those manufacturers who have purchased the fabrics from the market and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -5-95 relied upon by the Appellant was subsequently modified by the Board's circular No. 667/58/02-CX., dt. 26-9-02 and the modified circular reads as under: "Subject - Exemption from Central Excise Duty on goods manufactured from duty paid goods - regarding. The undersigned is directed to refer to Board's circular No.125/36 /95-CX. Dt. 15-5-95, issued from F. No. 341/26/95-TRU, on the above subject. 2. It was clarified therein that in the context of notifications which exempt specified goods provided such goods have been made from other goods on which appropriate duty of excise has already been paid, the benefit would be available even if the inputs are exempted from excise duty. This was based on the opinion of the Ministry of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional duty of customs also". 5. In both these cases, the finished goods-terry towels have been made from inputs procured free of central excise duty. Therefore, in view of the above circular of the Board, which is based on the judgment of the constitutional Bench of Hon'ble Supreme Court in the case of CCE, Vadodara v. Dhiren Chemical Industries [2002 (139) E.L.T. 3 (S.C.)], the benefit of exemption under Notification No.15/02 C.E. would not be available. 5.1 The issue involved in Hon'ble Supreme Court's judgment in case of Nahar Industrial Enterprises Ltd. v. UOI (supra) was as to whether in view of amendment to Notification No. 8/97-C.E. vide Notification No.11/2000-C.E., dt.1-3-2000 inserting the words-"or under any other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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