2012 (11) TMI 644 - AT - Central Excise

Captive consumption of yarn and base fabric - exemption - Notification No. 14/2002 dated 1.3.2002 v/s Notification No. 22/96-CE dated 23.7.1996. - grey processed fabric - Held that - Captive consumption has been exempted under Notification no. 22/96-C.E., dated 23-7-1996 and hence the appropriate duty required to be paid under the aforesaid condition read with the relevant notification is NIL and hence the condition relating to payment of appropriate duty has been satisfied. Also C.B.E. & C. Circular no. 680/71/2002-CX, dated 10-12-2002 which clarifies that the exemption under Notification no. 14/2002-C.E. is applicable to the composite Textile Mills even though they are exempted from payment of duty under Notification No. 22/96-C.E. in respect of captively consumed yarn and base fabric. The circular clarifies that textile fibres, raw material for composite mills, are brought from the market and hence have to be deemed to be duty paid in view of the Explanations to the said Notification no. 14/2002. Issue is already settled by the Tribunal in the case of Simplex Mills Co. Ltd. Vs. Commissioner of Central Excise, Mumbai 2005 (4) TMI 406 - CESTAT, MUMBAI in favour of assessee.

Summary

Issues:
Interpretation of Notification No. 14/2002 for concessional rate of duty on grey processed fabric.

Analysis:
The appellant filed an appeal against the order denying the benefit of Notification No. 14/2002 for grey processed fabric, citing the clearance of cotton yarn under a different notification. The Tribunal referred to a previous case where a similar issue was resolved in favor of the appellant based on the interpretation of the conditions of the notification. The conditions required the payment of appropriate duty on the yarn or fabric, which the appellant argued was exempted under Notification No. 22/96. The appellant also relied on a circular clarifying that exemption under Notification No. 14/2002 applied to composite textile mills, even if exempted from duty under Notification No. 22/96 for captive consumption. The Tribunal found the Commissioner's arguments unconvincing and noted that other similarly situated manufacturers had been granted the duty benefit under Notification No. 14/2002 based on the same clarification.

The Commissioner had applied a higher rate of duty to the appellant despite allowing the concessional rate under Notification No. 14/2002 to other similar units. The Tribunal concluded that the Commissioner had misdirected herself and set aside the impugned order, providing consequential relief to the appellant. The decision was based on the interpretation of the conditions of the notification and the application of relevant circulars and clarifications. The Tribunal found the appellant's arguments supported by the previous decision and allowed the appeal, setting aside the impugned order in favor of the appellant.