TMI Blog2005 (4) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... otton fabrics and MM Fabrics; that both the appellants were discharging the duty after claiming benefit of deemed credit in terms of Notification No. 53/2001-C.E. (N.T.), dated 29-6-2001 which was superseded by Notification No. 6/2002-C.E. (N.T.); that the Department has disallowed the deemed credit under Notification No. 6/2002 on the ground that the grey fabrics which is brought by them into the factory for the purpose of processing is not specified under inputs in the table below the notification. The learned Advocate submitted that the deemed credit under Modvat scheme was introduced on textile fabrics as part of Budget proposal presented in the Lok Sabha on 22-7-1996; that the basic excise duty on processed fabrics falling under Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 23-7-1996 empowering Central Government to notify the goods for deemed Modvat; that the Central Government issued Notification No. 11/96-C.E., dated 23-7-1996 for fixing rate of deemed credit of the dues in respect of various fabrics and yarn which were deemed to have been paid even if the various fabrics and yarn are not used directly in the manufacture of processed fabrics by the processors; that this Notification was subsequently replaced by Notification No. 29/96-Central Excise (N.T.), dated 3-9-1996 for revising the deemed credit rate; that the Central Board of Excise Customs also issued a Circular No. 243/77/96, dated 3-9-1996 for guidance and proper implementation of the Scheme of Modvat on textile fabrics; that in Para 4.5 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs, the deemed credit is therefore, available to the processors; that as the Central Government has allowed deemed credit of duty suffered on fibres or yarn, there was no question of declaring the grey cotton fabrics or grey man-made fabrics as declared inputs. He relied upon the decision in the case of Ashok Silk Mills v. CCE, Mumbai [2003 (158) E.L.T. 339 (T) = 2003 (59) RLT 702] and Mangal Textile Mills (I) Pvt. Ltd. v. CCE, Ahmedabad [2003 (159) E.L.T. 464 (T) = 2003 (54) RLT 282 (CEGAT)] and mentioned that in both these cases, deemed credit was held to be admissible on fabrics in respect of duty paid on yarn; that the fabrics was not specified inputs on the basis of Board Circular dated 3-9-1996. Finally, he mentioned that no penalty i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (117) E.L.T. 571 (T-LB) = 2000 (37) RLT 501 CEGAT-LB], wherein the Larger Bench has held that "when a particular thing is directed to be performed in a manner prescribed by Rules, it should be performed in that manner itself and not otherwise." 5. We have considered the submissions of both the sides. Rule 11 of the Cenvat Credit Rules, 2002 empowers the Central Government to declare the inputs on which the duty of excise or additional duty of Customs shall be deemed to have been paid at such rate as may be specified in the Notification and to allow Cenvat credit of such duty deemed to have been paid even if the declared inputs are not used directly by the manufacturer of final products declared in the Notification but are contained in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n yarn imputed on the basis that yarn accounts for 50% of the value of the finished fabrics. Finance Minister had adopted a simple procedure of imputed value to avoid the imposition of basic duty on grey fabrics being manufactured by thousands of powerlooms. The Board has also clarified vide Circular No. 243/77/96-CX., dated 3-9-1996 that the rate of deemed credit in case of fabrics is in lieu of duty paid on inputs by the processors. Para 4.5 of the Circular clearly mentioned that deemed credit is in lieu of duty paid on fabrics, yarns, dyes, chemicals, consumables and packaging materials. By issuing Notification No. 6/2002 the Central Government has only declared the inputs and final products in respect of which the deemed credit would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if possible and carry into effect the intention of the parties. The High Court has further held that the Courts will have to reject that construction which will defeat the plain intention of the Legislature even though there may be some in exactitude in the language used. We also observe that this Tribunal has already extended the benefit of Notification No. 29/96 C. E., dated 3-9-1996 in the case of Mangal Textile Mills India Ltd. to a manufacturer who processed the grey fabrics relying upon the Boards Circular dated 3-9-1996. Similarly, in the case of Ashok Silk Mills (supra), the Tribunal has extended the benefit of deemed credit to an independent processor under Notification No. 7/2001 wherein also the objections raised by the Revenue w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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