2007 (10) TMI 607 - AT - Central Excise

Summary

Issues involved: Interpretation of exemption notifications u/s 6/2002 and 30/2004, applicability of conditions for exemption, admissibility of credit, and limitation period for demand.

Interpretation of exemption notifications u/s 6/2002 and 30/2004:
The appellants manufactured Nylon Fishing Nets using nylon multi-filament yarn and classified nylon twine under CET sub heading 5607.90. The dispute arose regarding the availability of exemption under notifications 6/2002 and 30/2004. The Revenue contended that exemption conditions were not met as the filament yarn used was fully exempt from duty. The department interpreted notification 30/2004 to disallow exemption if credit on inputs was taken. Extended limitation period was applied.

Admissibility of credit and fulfillment of exemption conditions:
The Tribunal found that for the period post 9.7.04, the benefit of exemption under notification 30/2004 could not be denied as no credit of duty was taken on the inputs used for manufacturing nylon twine. The language of the notification did not require duty paid inputs, only that no credit should be taken. Thus, the exemption was held admissible for the disputed product.

Limitation period for demand and applicability of exemption under notification 6/2002:
For the period pre-notification 30/2004, the Tribunal held that exemption under notification 6/2002 was not available as the filament yarn used was duty exempt, not duty paid as required by Condition no. 34. However, the demand for this period was found to be beyond the statutory limitation period of one year. The appellants were not guilty of suppression to invoke the extended limitation. The Tribunal set aside the demands and penalties, allowing the appeals.

Separate Judgement by Judges:
None.