2009 (3) TMI 1063 - AT - Central Excise

Summary

Issues involved:
The issue involves eligibility for concessional rate of duty u/s Notification No. 8/97 for cotton yarn manufacturing using imported wax as consumables.

Summary:

Issue 1: Eligibility for concessional rate of duty under Notification No. 8/97
The case involved manufacturers of cotton yarn functioning as 100% E.O.U. who cleared yarn to DTA using imported wax as consumables. Revenue alleged non-compliance with raw material sourcing requirements and issued a Show Cause Notice for duty demand and penalties u/s 11AB of Central Excise Act, 1944. Adjudicating authority denied concessional duty rate eligibility, leading to the appeal. Appellants argued that wax was used for grazing yarn, not as raw material, citing precedents and twin tests for raw material determination. Revenue contended that wax is essential for yarn manufacture, hence not eligible for the benefit. The Tribunal analyzed expert evidence and previous decisions, concluding that wax is a consumable, not a raw material, as per Apex Court judgments and circulars. Upholding the appellants' contention, the impugned order was set aside, allowing the appeal.

Decision:
Respecting the precedents and expert opinions, the Tribunal found in favor of the appellants, setting aside the impugned order and allowing the appeal with consequential relief.