2004 (10) TMI 476 - AT - Central Excise

Summary

Issues:
1. Condition of pre-deposit of duty amount.
2. Denial of exemption notification no. 14/2000.
3. Interpretation of condition 3 of the notification.
4. Dispute over duty payment on inputs.

Analysis:

1. The primary issue in this case revolves around the application seeking dispensation of the pre-deposit of duty amount totaling Rs. 33,77,855/- and Rs. 6,34,399/-. The demand was confirmed against the appellant due to the denial of the benefit of exemption notification no. 14/2000 (Sr. No. 12), which provides exemption to knitted or crocheted fabrics of cotton subject to certain conditions.

2. The crux of the matter lies in the interpretation of condition no. 3 of the said notification. Condition 3 stipulates that if the fabrics are made from knitted or crocheted textile fabrics of cotton and appropriate duty has been paid on the inputs, the benefit of the exemption can be availed. The revenue contends that since the grey knitted fabrics did not avail the benefit, it implies no duty was paid, thus the condition is not fulfilled. Conversely, the appellant argues that duty was paid on the yarn and fibers, which are essential inputs, making them eligible for the benefit.

3. The Tribunal analyzed the contentions and highlighted that the condition requires the payment of appropriate excise duty on inputs, irrespective of whether the grey fabrics availed the notification benefit. The appellant's advocate emphasized that the condition necessitates duty payment on inputs, which was fulfilled in this case by paying duty on yarn and fibers. Additionally, reference was made to the Board's Circular suggesting that denial of notification benefits should not apply to processed fabrics in such instances.

4. After considering the arguments presented by both parties, the Tribunal concluded that the appellant has established a prima facie case in their favor. It was determined that the appellant fulfilled the condition by paying duty on the essential inputs, thereby warranting the benefit of the exemption notification. Consequently, the stay petition was granted unconditionally in favor of the appellant, allowing them to proceed without the pre-deposit of the duty amount.