2011 (6) TMI 343 - AT - Central Excise

Notification No.34/94-CE dated 01.03.1994 exemption - As per Revenue, even after completion of six months, the respondents had not furnished the proof of export and thereby they have not fulfilled the conditions of the Notification No.34/94 - Held that - Admittedly the textured yarn manufactured by the appellant was to be exported - The fact that the same has actually not been exported by the merchant exporter will not result in confirmation of demand of duty against the appellant, the Tribunal in the case of Shree Vithal S.S.K. Ltd. Vs. Collector of Central Excise (1991 (12) TMI 149 - CEGAT, BOMBAY) has held that in case the finally manufactured goods are not exported by the merchant exporters, the demand of duty can be raised only against the exporter and not against the manufacturer - Accordingly the appeal filed by the Revenue is rejected.

Summary

Issues:
- Interpretation of Notification No.34/94-CE regarding duty exemption for imported yarn used in job work for texturising and subsequent export.

Analysis:
The case involved a dispute over the duty liability of the respondents who had imported filament yarn for job work of texturising under Notification No.34/94-CE. The Revenue alleged non-compliance with the export proof requirement, leading to show cause notices and subsequent confirmation of duty demand by the Deputy Commissioner of Central Excise. The respondents appealed to the Commissioner (Appeals) and later to CESTAT, WZB, Mumbai, which remanded the matter back to the Commissioner (Appeals).

In the denovo proceedings, the Commissioner (Appeals) favored the assessee by emphasizing that the duty exemption under Notification No.34/94-CE is subject to proof of export satisfaction to the Assistant Commissioner. The responsibility for compliance lay with the merchant exporter, not the job workers. The Commissioner highlighted the obligations on the merchant exporter under the notification and trade notice, absolving the job workers from duty liability due to exporter's non-compliance.

The Revenue contended that the exemption under Notification No.34/94-CE hinges on the export of manufactured goods, emphasizing the lack of proof of export in the case. However, the Tribunal noted that the duty exemption is contingent on the satisfaction of the Assistant Commissioner regarding export or use in goods meant for export. Despite the absence of actual export by the merchant exporter, the duty liability falls on them as per legal provisions and precedent.

Ultimately, the Tribunal upheld the Commissioner (Appeals)' decision, rejecting the Revenue's appeal. The judgment reiterated that duty liability for non-exported goods falls on the merchant exporter, not the manufacturer engaged in job work. The legal interpretation of Notification No.34/94-CE and the division of duty responsibility between merchant exporters and job workers were crucial in resolving the case.

This comprehensive analysis delves into the legal intricacies surrounding duty exemption for imported yarn used in job work for texturising under Notification No.34/94-CE, emphasizing the distinct roles and liabilities of merchant exporters and job workers in fulfilling export requirements and duty obligations.