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Issues:
1. Duty demand on texturised yarn under DEEC Scheme. 2. Interpretation of supporting manufacturer role. 3. Imposition of penalty. Analysis: 1. The case involved a dispute regarding the duty demand on texturised yarn under the Duty Exemption Entitlement Certificate (DEEC) Scheme. The appellants, who were texturisers of Polyester yarn, had texturised the yarn received as imported under the DEEC Scheme and then exported it. The department contended that duty was payable on the texturised yarn as it was not exempt under Notification No. 178/83, as the raw material (POY) was fully exempt under the DEEC Scheme. The Commissioner found that the texturised yarn for export was cleared by another entity under the DEEC after obtaining it on High Sea Sale Basis, but acknowledged the appellant's role as a supporting manufacturer. Consequently, duty was demanded, and a penalty was imposed. 2. The appellants argued that they were supporting manufacturers for M/s. Akai Impex, and they had texturised and exported the yarn by sealing Export Marine Containers in their own factory. The exports were then made by a Merchant Exporter from the appellant's factory. Importantly, there was no evidence of the texturised goods being diverted to the domestic market. The appellants contended that even if the goods were not eligible for the exemption under Notification No. 178/83, there was no justification for imposing duty on the exported goods. It was concluded that no penalty was warranted, and the order demanding duty was set aside, allowing the appeal in favor of the appellants. 3. In the final judgment, it was ordered that the earlier decision demanding duty and imposing a penalty was set aside. The appellate tribunal ruled in favor of the appellants, stating that there was no cause for invoking duty on the exported goods, given the circumstances of the case and the role of the appellants as supporting manufacturers. The appeal was allowed, and no penalty was deemed necessary in this case.
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