2007 (4) TMI 543 - AT - Central Excise

Summary

Issues involved: Appeal filed by Revenue regarding duty on loose stock of finished fabrics declared by the respondents.

Summary:
The appeal was filed by Revenue challenging the duty liability on loose stock of finished fabrics declared by the respondents. The respondents had declared a certain quantity of finished fabrics before the introduction of the compounded levy scheme, which was duly verified and cleared on payment of duty. The dispute arose regarding the additional quantity shown as loose stock, which the respondents claimed was not in a marketable condition as it was either lying in water or meant for dyeing. The original authority demanded duty on the loose stock, but the Commissioner (Appeals) set it aside, stating that since the goods were shown in the finishing room in the RG-1 register and not fully manufactured, duty was not payable. The Revenue contended that the goods, even in loose condition, should be considered fully manufactured as they were shown in the BSR column of the RG-1 register. However, the Tribunal found that the loose quantity awaiting processing cannot be considered fully manufactured without evidence, and thus duty was not liable.

In their submissions, the respondents clarified that the loose quantity was either in water or awaiting dyeing, and the physical stock was verified by the department. The Revenue failed to provide evidence that the goods were fully finished, and their claim that the entire stock was in the BSR column was contradicted by the Commissioner (Appeals) who stated that the goods were in the finishing room. Without evidence that the quantity was in the BSR, the loose stock awaiting processing cannot be deemed fully manufactured and hence not liable for duty. Consequently, the Revenue's appeal was dismissed.

*(Pronounced in Court.)*