2002 (8) TMI 791 - AT - Central Excise

Summary

Issues:
1. Demand of duty on processes of warping and winding.
2. Imposition of penalty equivalent to the duty amount.
3. Exemption from duty during a specific period.
4. Availability of Modvat credit for duty paid on yarn.
5. Applicability of extended period of limitation.
6. Failure to consider arguments by the Commissioner.

Analysis:
1. The Commissioner demanded duty and imposed a penalty on the appellant for not paying duty on the processes of warping and winding, deemed as manufacture under Note 1 to Chapter 52 of the yarn used in weaving fabric.
2. The appellant contended that duty demand should be reduced due to exemption during a specific period and that duty paid on yarn could be used as Modvat credit for manufactured goods. The demand was also argued to be barred by limitation.
3. The appellant argued that information provided through invoices and RT 12 returns indicated duty payment on yarn at spindle stage, alerting officers of the intended processes. The Commissioner did not consider these arguments.
4. The appellant claimed that the extended period of limitation should not apply as the intended use of yarn was communicated to the department. However, the Commissioner dismissed this claim citing the absence of a classification list.
5. The Tribunal directed the Commissioner to reexamine the claims of Modvat credit, exemption, and limitation. The appellant was given a month to provide necessary material, and the Commissioner was instructed to pass orders in accordance with the law on these aspects.
6. Ultimately, the appeal was allowed, and the impugned order was set aside for further examination by the Commissioner based on the arguments presented by the appellant.