2004 (4) TMI 402 - AT - Central Excise

Summary

Issues:
1. Whether doubled or multifold yarn manufactured from duty paid single yarn is liable for duty payment after the withdrawal of exemption?
2. Whether the failure to follow the proforma credit procedure by not submitting D-3 intimations justifies duty demand?
3. Whether the exemption for doubled or multifold yarn made from duty paid yarn applies in this case?
4. Whether the failure to file D-3 declaration is a condonable lapse justifying setting aside the lower authorities' orders?

Analysis:
1. The dispute in the appeals revolves around the liability for duty payment on doubled or multifold yarn manufactured by the appellants from duty paid single yarn after the withdrawal of exemption under Notification No. 31/93-C.E. The exemption restoration under Notification No. 90/94-C.E. is also a crucial aspect.

2. The main objection raised by the department is the failure of the appellants to follow the proforma credit procedure by not submitting D-3 intimations to the concerned range officers. The lower authorities considered this omission significant as it hindered the verification of whether the received materials were duty paid.

3. The judgment delves into the scheme of exemption for doubled or multifold yarn, emphasizing that the exemption applies to yarn made from duty paid yarn. The court notes that no inquiries were made regarding the duty status of the input yarn or challenges to the exemption claim, indicating a lapse in establishing the necessity for duty payment.

4. Considering the context of the exemption scheme and the lack of evidence challenging the duty payment status of the input yarn, the failure to file D-3 declarations is deemed a condonable lapse. Consequently, the judge allows the appeals and sets aside the orders of the lower authorities, highlighting the importance of the specific requirements under the exemption scheme.

This detailed analysis of the judgment provides a comprehensive understanding of the issues addressed and the reasoning behind the decision to set aside the duty demand based on the failure to follow the proforma credit procedure and the application of the exemption provisions for doubled or multifold yarn made from duty paid yarn.