TMI Blog2023 (12) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... on only provides that finished goods should be manufactured or produced from raw materials manufactured or produced in India - In the present case, cotton waste is indeed produced in India. The goods cleared to DTA in the present case are Open End Yarn which is manufactured wholly out of cotton waste generated at the time of manufacture of Ring Spun Yarn in the factory premises of appellant. The entire quantity of imported cotton or domestic cotton used as raw materials for the manufacture of Ring Spun Yarn and not for the Open End Yarn - In the present matter imported cotton are raw material for Ring Spun Yarn , it cannot be said that the same are raw materials as envisaged in Notification No. 8/97 for Open End Yarn. The expression raw materials is a material used in manufacture of goods; in the case in hand Open End Yarn is manufactured from cotton waste and not from the imported cotton. The Supreme Court in the decision in COMMISSIONER OF CENTRAL EXCISE, SURAT-I VERSUS M/S FAVOURITE INDUSTRIES [ 2012 (4) TMI 65 - SUPREME COURT ] upheld the judgment of this Tribunal in Favourite Industries and ruled that the benefit of exemption under Notification No. 8/97-C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the manufacture of ring spun cotton yarn. For manufacture of ring spun yarn, appellant are importing duty free raw cotton as well as procuring raw cotton from domestic manufacturers without payment of duty. In the process of manufacture of ring spun yarn, cotton waste emerges which is further used by the appellant for manufacture of open end cotton yarn which is cleared in domestic tariff area (DTA). During the period 01.04.2000 to 31.03.2003 appellant have cleared the open end yarn to DTA by availing the benefit of concessional rate of duty under Notification No. 8/97-CE dated 01.03.1997 and during the period from 01.04.2003 to 31.03.2005, appellant have cleared open end yarn to DTA by availing the benefit of concessional rate of duty under Sr. No. 3 of Notification No. 23/2003-CE dated 31.03.2003. Both the Notifications are pari materia and provide effective rate of duty on goods cleared by 100% EOU in DTA as equivalent to normal rate of Excise Duty payable by any non-EOU unit. However, the benefit of the said notifications were available subject to the conditions that the goods cleared in DTA shall be manufactured wholly out of indigenous raw materials. A search was carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N dated 21.07.2005. Against this order of the Commissioner, the present appeal has been filed. 2. Shri Ananad Nainawati Learned Advocate appearing on behalf of the appellant submits that the open end cotton yarn cleared into DTA is not manufactured out of imported raw cotton and thus benefit under S.No. 3 of Notification No. 23/2003 is rightly claimed by the appellant. Entire quantity of open end cotton yarn is manufactured from cotton waste wholly produced in India and thus condition No. 3 of the said Sl. No. stands satisfied by the appellant. 2.1 He also submits that in the present case, emergence of cotton waste during the manufacturing of ring spun yarn is inevitable because it is not possible to manufacture desired quantity of ring spun yarn with lessor quantity of raw cotton with zero waste. Ld. Commissioner in the impugned order erred in arriving a finding that concept of technological necessity cannot be applied to cotton waste. Cotton waste so generated in form of short fiber etc. is used by the appellant to manufacture open end cotton yarn. Cotton waste if cleared as such in DTA is specifically exempted under Notification No. 23/2003-CE. This is because purpose of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of duty, and such intentional non-compliant conduct on the part of the assesse has to be specifically brought out by the department as opposed to mere allegation to such effect. Department cannot press into service the machinery for invoking the extended period of limitation unless there is established an act of suppression or mis-declaration with an intent to evade payment of duty. He placed reliance on the following judgments: Commissioner of Central Excise Vs. Bajaj Auto Ltd. 2010 (260) ELT 17 (SC) Cosmic Dye Chemical Vs. CCE, Bombay -1995 (75) ELT 721 (SC) Tamil Nadu Housing Board Vs. Collector -1994 (74) ELT 9 (SC) Cadila Laboratories Pvt. Ltd. Vs. CCE 2003 (152) ELT 262 (SC) Continental Foundation Joint Venture Holding, Naphtha H.P. Vs. CCE, Chandigarh - I -2007 (216) ELT 177 (SC) 3. On the other hand, Shri Rajesh Nathan Learned Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the adjudicating authority. 4. We have carefully considered the submission of both the sides and also perused the records. We find that the main issue involved in the present matter is whether the appellant a 100% EOU is eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NIL rate of duty. 4.2 In the present matter the dispute is related to first condition only which provide that the goods are produced or manufactured wholly from the raw materials produced or manufactured in India . The case of the revenue is that Open end yarn was manufactured by the appellant out of imported raw cotton hence not eligible for exemption. However, we find that before deciding the impugned matter it is necessary to first understand the manufacturing process of appellant. It is on record and admitted fact that during the investigation Shri Jitendra Pagaria, Deputy Manager (Commercial) of the appellant in his statement explained that waste cotton used by them for manufacture of Open End Cotton Yarn. Further the investigation report dated, 10.03.2007 of Commissioner (Investigation) also provide the production process of appellant as under: Production Process : The applicant produces: 1) 100% Ring Spun Cotton yarn from cotton at ring spinning section and 2) Open End Yarn from the waste of Cotton generated. Waste generated out of ring spinning yarn is used as raw materials for manufacturing open end yarn. 4.3 From the above fact, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court judgment, it is clear that goods manufactured in EOU is duly considered to be manufactured in India. In the present matter the cotton waste was manufactured in Appellant factory and the same was used for Open End Yarn accordingly the condition of the Notification stand satisfied by the appellant. In the present matter Ld. Commissioner has failed to appreciate that the raw material is Cotton Waste which was manufactured/ produced in India and not raw cotton imported. Further Section 3 of the Central Excise Act, 1944 is a charging section which provides for levy of duty of excise on excisable goods at the rate prescribed for levy of duty of excise on excisable goods at the rate prescribed in the Central Excise Tariff Act, 1985. Where the goods are covered by CETA the same are excisable goods within the meaning of Section 2(d) of the Act. This equally applies to goods manufactured by or in an EOU. Goods manufactured by or in an EOU are also chargeable to duty of excise under Section 3 of the said Act, and therefore excisable goods within the meaning of Section 2(d) of the Act. Since the cotton waste is covered by the heading 5202 of CETA, the same is excisable goods eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner to consider this issue and decide afresh. However, we do not find any merit in the contentions of the Revenue that ER-2 Returns which were filled in by the assessees did not enable the Central Excise Officers to find out whether the DTA sales were in excess of the 50% of the quantities of the exported goods or not. We do not find merit in this contention for two reasons : first, it is factually incorrect to suggest that the details of the quantities of DTA sales and the quantities of goods manufactured and goods exported were not available in the Returns. We have perused the ER-2 Returns available on record. The format of ER-2 Returns specified by the Central Government shows that details of manufacture and clearance of goods of the concerned month are to be declared at Clause (iii) of the Returns and all the relevant details like description of goods, classification number of the goods, unit of quantity etc. along with the quantity of each of the goods manufactured and the quantities of physical export as well as the value of physical export, deemed export and also the quantities of each of the goods cleared in DTA in terms of quantity as well as value have been shown in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the returns had all the information to enable him to verify the facts is, therefore, correct and cannot be termed as perverse so as to warrant any interference at our ends. 35. We are of the view that the conclusion arrived at by the CESTAT that the demand was time-barred and the revenue cannot invoke the extended period of limitation in this case is not based on mere assumptions or presumptions but is based on the conclusion arrived at after considering the documentary evidence on record including ER-2 Returns and Central Excise invoices of the assessees. 4.8 The same issue of limitation for the 100% EOU was also considered in the case of Commissioner of Central Excise, Pune-I v. Emcure Pharmaceuticals Ltd. - 2014 (307) E.L.T. 180 (Tri. - Mumbai) wherein, the Tribunal has passed the following order : 5. We have carefully considered the submissions made by both the sides. From the records, it is clearly seen that the respondent had declared to the department that they would be availing the benefit of Notification No. 23/2003 in of advance DTA sales to be effected by them in terms of the permission granted by the Development Commissioner as early as in 2004 itself. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g a show cause notice dated 3-7-2009 covering a period April, 2004 to March, 2006 was barred. 4. These very facts were, therefore, appreciated by the Tribunal and in arriving at the conclusion that the show cause notice and the proceedings in pursuance thereof were barred by limitation. It may be that the Tribunal dealt with an incidental contention of the revenue. Merely because that incidental question has been dealt with, we cannot loose sight and shift the focus from the main question. The main question was the applicability of Section 11A and invocation of the extended period thereunder. The extended period could not have been invoked in the absence of the requisite ingredients and to be found in Clauses (a) to (e) of sub-section (4) of Section 11A of the Central Excise Act, 1944. This is clearly a finding of fact and reached in the backdrop of the assessee s peculiar case. We do not think that such findings raise any substantial question of law The Tribunal s view cannot be said to be perverse. It is a possible view of the matter. The appeal is devoid of merits and is dismissed. 4.10 As discussed above, in the present case since there is no suppression of fact on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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