2009 (8) TMI 1053 - AT - Central Excise

Summary

Issues:
1. Eligibility for benefit under Notification 14/2002-C.E.
2. Interpretation of duty payment on input materials.
3. Limitation period for demand of duty.
4. Comparison between Notification 14/2002 and Notification 15/2002.
5. Applicability of Explanation in Notification 14/2002.

Eligibility for benefit under Notification 14/2002-C.E.:
The appellant was asked to pay duty for processed fabrics due to non-fulfillment of conditions 2 and 5 of Notification 14/2002-C.E. The Revenue argued that since the grey fabric input was not duty-paid, the appellant couldn't claim exemption. The appellant contended that payment at 'nil' rate constituted duty payment, citing a precedent and challenging the reliance on a circular. The appellant argued that the grey fabrics from SSI units should be deemed duty-paid under the notification.

Interpretation of duty payment on input materials:
The appellant argued that the grey fabrics received without duty payment from SSI units should be considered duty-paid under Notification 14/2002-C.E. The appellant relied on an Explanation in the notification stating that textile yarns or fabrics are deemed duty-paid even without proof of payment. This argument was supported by the Tribunal's decision in a similar case and a subsequent clarification by the Board.

Limitation period for demand of duty:
The appellant pleaded limitation against the duty demand, citing a dropped proceeding in parallel cases for the recovery of deemed credit. The appellant argued that if there was no suppression of facts in earlier proceedings, the demand for duty in the present case should also be time-barred. The Revenue opposed, relying on findings by lower authorities and a precedent denying benefit under a different notification.

Comparison between Notification 14/2002 and Notification 15/2002:
The appellant highlighted a crucial difference between Notification 14/2002 and Notification 15/2002, emphasizing an Explanation in the former deeming fabrics duty-paid without documentation. This distinction was used to argue that duty cannot be demanded on processed fabrics made from grey fabrics received without duty payment.

Applicability of Explanation in Notification 14/2002:
The Tribunal found a prima facie case for the appellants based on the Explanation in Notification 14/2002, the Board's clarification, the Tribunal's previous decision, and the dropped demand of deemed credit in parallel proceedings. Consequently, there was a waiver of pre-deposit and stay of recovery for duty and penalty amounts.