2006 (5) TMI 397 - AT - Central Excise

Summary

Issues:
1. Whether exemption from basic excise duty extends to additional duty of excise.
2. Interpretation of Rule 8 of the Central Excise Rules regarding exemption from excise duties.
3. Validity of demand for additional excise duty on processed fabrics used for captive consumption.

Analysis:
1. The appellant, a fabric manufacturer, processed grey cotton fabric exempt from basic excise duty but not from additional duty of excise. The appellant used the processed fabrics for captive consumption without paying the additional duty. The tribunal confirmed the duty demand for the additional excise duty payable on the processed fabrics.

2. The appellant contended that the exemption from basic excise duty should also extend to the additional duty of excise based on a judgment of the Bombay High Court. However, the tribunal noted that basic excise duty and additional excise duty are separate levies, requiring specific exemptions for each under Rule 8 of the Central Excise Rules or Section 5A of the Central Excise Act. The tribunal emphasized that the power to grant exemption must be exercised for both levies, and in this case, there was no exemption from additional excise duty during the relevant period.

3. After considering submissions from both sides, the tribunal agreed with the legal position presented by the Senior Departmental Representative (SDR). It clarified that while the power to grant exemption from basic and additional excise duties is provided in the same rule or section, exemptions must be explicitly granted for each levy. As there was no exemption from additional excise duty applicable to the processed cotton fabrics, the demand for additional excise duty on the appellant was deemed valid and in accordance with the law. Consequently, the tribunal upheld the impugned order and rejected the appeal.

In conclusion, the tribunal affirmed that exemption from basic excise duty does not automatically extend to additional duty of excise, emphasizing the need for specific exemptions for each levy as per the Central Excise Rules. The judgment highlights the importance of complying with statutory provisions regarding excise duties and confirms the duty demand for the processed fabrics used for captive consumption.