TMI Blog1996 (2) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... to remove the said fabrics for home consumption they pay duty on the base fabrics under AR-1 and if the goods are to be exported, they remove it under bond AR-4. 3.Under Rule 96ZI of the Rules, excise duty liability on embroidery is discharged under compounded levy system. The duty liability on embroidery is discharged by debit entry before the starting of the shift when the base fabrics is issued for embroidery. The duty liability is to be calculated at appropriate rate fixed under Notification No. 211/82, dated 31st August, 1982. 4.It has been contended that in 1985, for the first time since 1968, the Department required the Petitioners to pay duty on base fabrics before start of the shift along with duty on embroidery on the ground that Proviso (1) to Notification No. 211 of 1982 provides so. On that basis the Department has issued show cause notice dated 24th September, 1985 alleging that the Petitioners have not discharged duty liability on base fabrics at the time of issue of base fabrics for embroidery and that goods have been cleared for export under rebate claim under Rules 12/13 and 96ZK(2) without payment of duty on base fabrics and, therefore, the Petitioners were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dery during the said shift : Provided ..." 7.On the basis of the said Rule, Notification No. 211 of 1982 is issued and which is amended by Notification No. 20 of 1986, dated 10th February, 1986. The entire controversy is based upon interpretation of Proviso (1) to the said Notification. The relevant part of the said Notification is as under : "Compounded levy rates for textile fabrics : In Pursuance of rule 96ZI of the Central Excise Rules, 1944, and in supersession of the Notification of the Government of India in the Ministry of Finance (Department of Revenue and Insurance) No. 85/71-Central Excises, dated the 29th May, 1971, the Central Government hereby fixes for embroidery machines utilised for manufacturing from each variety of fabrics specified in column (2) of the Table below, embroidery in the piece, in strips, or in motifs, the rate of duty specified in the corresponding entry in column (3) thereof. THE TABLE Sl. No. Description of base fabrics on which embroidery is made. Rate of duty in rupees per metre length of the machines per shiFT (1) (2) (3) Rs. I Cot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides that cotton fabrics may be removed without payment of duty from one factory to another factory for the purpose of embroidery. Sub-rule (1) and (3) of Rule 96DD, which are relevant for our purpose, read as under : "96DD. Procedure for removal of cotton fabrics from one factory to another without payment of duty for embroidery. Cotton fabrics may be removed without payment of duty from(1) one factory to another factory for the purpose of embroidery, subject to the observance of the procedure hereinafter prescribed. (2).... If cotton fabrics, after being embroidered, are cleared for(3) home consumption from the embroidery factory, the duty payable at the time of such clearance and such other dues that may be payable in respect of such goods may be paid either by the owner of the embroidery factory or by the owner of the originating factory." In view of the aforesaid Rules, cotton fabrics can be removed without payment of duty from one factory to another factory for the purpose of embroidery and if the goods are cleared after being embroidered for home consumption from the embroidery factory, the duty payable at the time of such clearances is required to be paid eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n like manner be exported without payment of duty from a warehouse or a licensed factory, provided that export is made in accordance with the procedure set out. This Rule 13 is not subject to Rule 96DD or Rule 96ZI. Moreover, proviso (1) to Notification No. 211/82, dated 31st August, 1982 does not provide that the benefit of export of goods without payment of duty under a bond should not be given. 12.In this view of the matter, in our view, the interpretation given by the Excise authorities in the impugned orders dated 8th June, 1987, 9th October, 1987 and 19th October, 1987 (Exhibits `I', `K' and `N' respectively to the Petition) that duty on cotton base fabrics has to be paid in addition to duty on the embroidery and also that it is required to be paid on the base fabrics before the fabrics are taken on embroidery machine is against the aforesaid statutory Rules. 13.It is also to be noted that subsequently the Central Excise Collectorate, Bombay, has issued Trade Notice No. 46 (MP), dated 20th/23rd May, 1988 wherein it has been clarified that base fabrics duty in respect of cotton fabrics brought under Rule 96DD should be collected only after the embroidery of such fabrics an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rant of rebate of excise duty in respect of embroidery, in piece, in strips and in motifs produced by the manufacturers paying duty at the compounded rates under the provisions of the procedure set forth in Section E-IX of Chapter V of the Central Excise Rules is prescribed by the Central Government. For cotton fabrics, the rebate is prescribed at the rate of Rs. 0.87 per square metre. The rate of rebate of duty is prescribed per square metre and the duty on the embroidery is fixed and levied in rupees per metre length of the machines per shift. Hence, if some more rebate is given, it cannot be said that the Petitioners are at fault. The rebate is fixed per metre on the embroidered cotton fabrics and other fabrics mentioned in the said Notification. It is not provided that rebate would be particular percentage of the excise duty paid. 15.The result of the aforesaid discussion is : (a) the impugned orders holding that Petitioners were required to pay excise duty on base fabrics at the time of removal of cotton fabrics for export are totally unjustified. Proviso (1) to Notification No. 211/82, dated 31st August, 1982 nowhere provides to that effect. The said proviso provides that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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