2010 (2) TMI 842 - AT - Central Excise

Ready-made garments - knitted or crocheted fabrics - Exemption - Held that - the issue has been decided against the appellant its own case (2004 -TMI - 53541 - CESTAT, NORTHERN BENCH, NEW DELHI) - non-entitlement of benefit under Notification No. 15/2002-C.E. on account of utilization of one of the inputs which has been exempt from payment of duty as the same stands settled in the earlier decision in relation to the appellants own case which is now the subject matter of challenge before the Apex Court, if the appellants challenges the present decision before the Apex Court the said issue would also be available to the appellants to be raised before the Apex Court. For the reasons stated above, the appeal fails and is thereby dismissed.

Summary

Issues:
1. Dismissal of appeal against demand of Rs. 8,80,370/- along with interest and penalty.
2. Applicability of exemption under Notification No. 15/2002-C.E. to knitted garments manufactured during a specific period.

Issue 1:
The appeal arose from an order confirming a demand of Rs. 8,80,370/- against the appellants for not paying duty on knitted fabrics manufactured and cleared, as well as on clearances of ready-made garments. The Adjudicating authority confirmed the demand, leading to the appeal. The appellants contested the proceedings, but the appeal did not yield favorable results, except for a partial relief in relation to the penalty.

Issue 2:
The main issue revolved around whether the appellants were entitled to the exemption under Notification No. 15/2002-C.E. for knitted garments manufactured during a specific period. The appellants' advocate conceded that the main issue was already decided in a previous case of the Tribunal involving the same appellants, presently under challenge before the Apex Court. The dispute focused on the timely payment of duty on inputs as a condition for claiming the exemption benefit.

The notification required payment of duty on inputs used for manufacturing the final product without availing credit. The Apex Court's decision emphasized strict compliance with exemption conditions. The failure to pay duty on inputs before utilizing them for the final product led to the denial of exemption benefits. The appellants' argument that the duty was eventually paid was countered by the requirement of timely payment as a prerequisite for claiming exemption.

The Commissioner (Appeals) justified rejecting the benefit based on non-compliance with the payment condition before utilization of inputs. The decision in another case supported the contention that compliance with input-related obligations before utilization was crucial for eligibility for exemption benefits. The absence of case law was deemed insufficient to warrant the benefit to the appellants. The dismissal of the appeal was upheld, with the option to challenge the decision before the Apex Court.

In conclusion, the judgment upheld the demand against the appellants and denied them the benefit of exemption under Notification No. 15/2002-C.E. due to non-compliance with the duty payment condition on inputs before utilizing them for manufacturing the final product. The decision highlighted the importance of strict adherence to exemption conditions for claiming benefits under such notifications.