2008 (12) TMI 495 - AT - Central Excise

Summary

Issues:
Appeal against disallowance of credit for duty paid on procured goods and texturization under Rule 57AB(2)(c) of Central Excise Rules, 1944. Claim of exemption under Notification No. 6/2000. Interpretation of the definition of independent texturiser. Consideration of benefit of exemption notification in relation to duty demand.

Analysis:
The appellant procured duty paid Partially Oriented Yarn (POY) from the market, took credit of the duty paid, and texturized the same. The original authority disallowed the credit taken, ordered recovery of credit amounting to Rs. 1,46,094, and held that the appellant is not an independent texturiser under Rule 57AB(2)(c). On appeal, the Commissioner (Appeals) upheld the original authority's decision.

The appellant contended that they are an independent texturiser and, even if not, they are eligible for the benefit of exemption under Notification No. 6/2000. They argued that the duty demand should not stand as they paid a higher duty rate compared to what would be applicable under the claimed exemption. The Department argued that the definition of independent texturiser is clear in Rule 57AB(2)(c) and cannot be interpreted with the aid of the said Notification. They relied on a Supreme Court decision to support their stance.

The Tribunal agreed with the Department that the appellant did not claim the benefit of the Notification at the time of clearance of the texturised yarn. However, they noted that the issue of eligibility for the exemption claimed needs to be considered. If eligible, the appellant paid duty in excess of what was required, justifying the setting aside of the demand. The Tribunal remanded the matter to the original authority for a fresh decision after verifying relevant facts and giving the appellant a reasonable opportunity of hearing.

In conclusion, the appeal was allowed by way of remand, emphasizing the need to consider the exemption claim in relation to the duty demand. The Tribunal highlighted the importance of verifying facts to determine eligibility for the claimed exemption and the consequent duty implications.