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Issues involved: Determination of duty on the length of gallery/patti in the context of independent processors/manufacturers of man-made fabrics under Chapter Heading No. 54 of Central Excise Tariff Act, 1985 during the period from 16-12-98 to 1-3-2000. Refund claim of duty paid on gallery/penal patti rejected as time-barred due to non-payment under protest.
The appellants, engaged as independent processors/manufacturers of man-made fabrics, were working under a compounded levy scheme during a specific period. Duty payment was required u/s Rule 96 ZQ of C. Ex. Rules, 1944 on the chambers of the Stenter machine based on the annual production capacity determined under the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998. The Deputy Commissioner of Central Excise, through an order-in-original, determined that the measurement of gallery/patti needed to be added to the length of the chamber of the stenter machine for duty calculation, as it contributed to the fabric drying and heat-setting process. The appellants paid duty on the gallery/penal patti as per the department's insistence during the relevant period. Several decisions of the Appellate Tribunal & Larger Bench, including the case of Sangam Processors Bhilwara Ltd. v. CCE, Jaipur, held that the gallery, lacking specific equipment, did not aid in the fabric drying or heat-setting process as required by the Rule's Explanation I. Challenging the assessment order, the appellants appealed to the Commissioner (Appeals), who allowed the appeal stating that gallery and penal patti should not be included in the chamber's length for duty calculation. A refund claim for duty paid on gallery/penal patti was filed by the appellants but was rejected as time-barred due to non-payment under protest. The Tribunal considered the challenge to the provisional assessment, the successful appeal, and the refund claim, noting that the limitation under Section 11B might not apply based on the dispute regarding the assessment itself. The matter was remanded to the original adjudicating authority to assess the refund claim's compliance with the unjust enrichment clause under Section 11B.
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