2003 (11) TMI 448 - AT - Central Excise

Summary

Issues:
- Whether the respondents were entitled to the benefit of receiving non-duty paid yarn under Notification No. 49/94-C.E. (N.T.) when most manufacturing processes were not carried out by the respondents themselves.

Analysis:
The issue raised in both appeals of the Revenue was whether the respondents, who were exporters of fabrics, were entitled to the benefit of receiving non-duty paid yarn under Notification No. 49/94-C.E. (N.T.) when most manufacturing processes were not conducted by the respondents themselves. The respondents obtained filament/partially oriented yarn under a duty exemption certificate, which was then processed through texturizing, weaving into fabrics, and other operations carried out on a job work basis by third parties. Show cause notices alleged that the respondents were not eligible for the duty exemption due to the manufacturing processes not being performed by them. The Commissioner (Appeals) allowed the appeals, holding that the respondents' case fell within the exemption. The Commissioner interpreted the broad definition of 'manufacture' under Rule 13, which included processes like blending or alteration, to cover the respondents' activities. Additionally, the Commissioner relied on a clarification issued by the Board under Circular No. 155/66/95-CX-VI, supporting the respondents' position.

The appeals did not contest that the resultant goods were not exported but rather focused on the Board's Circular being a clarification of an earlier notification. Upon reviewing the records and hearing both sides, the Tribunal found no illegality or impropriety in the Commissioner (Appeals)'s order. Rule 13 of the Central Excise Rules allowed for the export in bond of goods on which duty had not been paid, and the Notification in question facilitated the removal of intermediate goods without duty payment to promote exports. This measure aimed to prevent additional financial burdens from inflating the cost of export goods. The Tribunal noted that the Board's clarification favored the exporters, and since there was no evidence that the intermediate goods were not used in export production, the appeals lacked merit. Consequently, the Tribunal rejected the appeals, affirming the Commissioner (Appeals)'s decision in favor of the respondents.