2007 (6) TMI 390 - AT - Central Excise

Summary

Issues:
1. Duty payment on nylon yarn captively consumed.
2. Duty payment on nylon tyre cord fabrics cleared to another company.

Issue 1: Duty payment on nylon yarn captively consumed

The appellants, manufacturers of Nylon Filament Yarn and Nylon Tyre Cord Fabrics, were directed to pay duty on nylon yarn captively consumed by them. The order was passed by the Commissioner of Central Excise following a Tribunal's remand order that observed a miscarriage of justice in the earlier order. M/s. Apollo Tyres Ltd., with an advance license, had permission to procure nylon yarn from the appellants and process it into tyre cord fabric. The appellants were permitted to clear 250 MTs of nylon yarn to M/s. Apollo Tyres Ltd. without duty payment. The withdrawal of permission by the Assistant Collector did not affect the transaction already concluded between the parties under valid permissions. Both parties followed the prescribed procedures, and the demand for duty on the nylon yarn cleared to M/s. Apollo Tyres Ltd. was deemed unsustainable.

Issue 2: Duty payment on nylon tyre cord fabrics cleared to another company

The appellants were also directed to pay duty on nylon tyre cord fabrics cleared to M/s. Apollo Tyres Ltd. for the manufacture of export-obligated tires under an advance license. The Tribunal found that the demand for duty on the nylon tyre cord fabrics was unjustified. The fabrics were used in the production of tires that were exported to fulfill export obligations. Consequently, the demand for duty on the nylon tyre cord fabrics was deemed unsustainable. As a result, the appeal was allowed, and the appellants were relieved of the duty payment obligations on both the nylon yarn and the nylon tyre cord fabrics.

This judgment by the Appellate Tribunal CESTAT, CHENNAI, delivered by the judges Shri P.G. Chacko and P. Karthikeyan, addressed the issues of duty payment on nylon yarn captively consumed and duty payment on nylon tyre cord fabrics cleared to another company. The detailed analysis highlighted the permissions granted, the procedural compliance, and the conclusion that the demands for duty on both the nylon yarn and the nylon tyre cord fabrics were unsustainable due to valid permissions and adherence to prescribed procedures.