2003 (1) TMI 613 - AT - Central Excise

Summary

Issues:
1. Captive consumption of Cotton Yarn without payment of duty.
2. Applicability of Rule 49A for deferred payment of duty.
3. Discrepancy in the quantity of Yarn consumed and duty paid.
4. Appeal against the Assistant Commissioner's decision by the Revenue.
5. Commissioner (Appeals) decision on duty payment obligation.
6. Challenge to Commissioner (Appeals) decision.
7. Verification of duty payment on the quantity of Yarn consumed.

Issue 1: Captive consumption of Cotton Yarn without payment of duty
The case involved an appellant company engaged in the manufacture of Cotton Yarn and Cotton Fabrics, facing a show cause notice for allegedly consuming a quantity of Cotton Yarn captively without paying duty. The notice contended that issuing Yarn for captive consumption was deemed removal, necessitating duty payment as per Rule 9.

Issue 2: Applicability of Rule 49A for deferred payment of duty
The appellants argued that they followed Rule 49A, allowing them to pay duty on the consumed Yarn at the stage of Cotton Fabrics clearance. The Assistant Commissioner accepted this alternative duty payment scheme and dropped the demand against the appellant company.

Issue 3: Discrepancy in the quantity of Yarn consumed and duty paid
The Revenue challenged the Assistant Commissioner's decision, alleging that the entire quantity of Yarn consumed was not accounted for in the Cotton Fabrics. The Commissioner (Appeals) ruled in favor of the Revenue, emphasizing the obligation to pay duty on the Yarn not used in fabric manufacturing.

Issue 4: Appeal against the Assistant Commissioner's decision by the Revenue
The Revenue appealed the Assistant Commissioner's decision, arguing that the appellants did not provide evidence to justify their claim of duty payment on the consumed Yarn. They contended that Rule 49A applied only to Yarn contained in manufactured Cotton Fabrics.

Issue 5: Commissioner (Appeals) decision on duty payment obligation
The Commissioner (Appeals) upheld the Revenue's appeal, highlighting the legal obligation to pay duty on the quantity of Yarn not utilized in fabric production, as per Ministry guidelines.

Issue 6: Challenge to Commissioner (Appeals) decision
The appellants challenged the Commissioner (Appeals) decision, asserting that they paid duty on the Yarn used in fabric manufacturing. They argued that the duty demand was unfounded as they fulfilled their duty payment obligations.

Issue 7: Verification of duty payment on the quantity of Yarn consumed
The case was remanded back to the Assistant Commissioner to examine the quantity of Yarn on which duty was paid by the appellants. The need for verification arose as the exact quantity on which duty was paid was not determined, requiring further scrutiny.

In conclusion, the judgment addressed the duty payment discrepancies concerning captive consumption of Cotton Yarn, the application of Rule 49A for deferred duty payment, and the obligation to pay duty on Yarn not utilized in fabric manufacturing. The case highlighted the importance of verifying duty payment on the actual quantity of Yarn consumed, leading to a remand for further examination by the Assistant Commissioner.