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2015 (10) TMI 1844 - SC - Central ExciseDenial of Abatement claim - Determination of annual capacity of production - Held that - The abatement of duty under consideration in respect of Stenter of SM ECON-2100 make are for the period of closure from 06.11.1999 to 14.11.1999, 10.12.1999 to 18.12.1999 and 11.02.2000 to 19.02.2000 and in respect of Stenter of PRIMATEX for the period of closure from 10.01.2000 to 18.01.2000 wherein the duty payable on the stenters installed in the factory premises has to be paid in advance during the months of November, 1999, to February, 2000, in terms of closure (e) to sub-Rule (7) of the Rule 96ZQ of the Rules. - It is not even necessary to go into this question because of a simple reason. The vires of the aforesaid Rule was challenged before the Madras High Court in Beauty Dyers v. Union of India 2001 (12) TMI 95 - HIGH COURT OF JUDICATURE AT MADRAS and the High Court held the said Rule to be ultravires the erstwhile Section 3A of the Act. Special leave petition was preferred by the Union of India against the said judgment which was dismissed by this Court. The judgment is reported by the Madras High Court in Commissioner of Central Excise v. M/s. Entex Pvt. Ltd. 2015 (9) TMI 827 - MADRAS HIGH COURT . - It becomes clear that the respondent was not supposed to pay any duty, more so, when the entire exercise was revenue neutral. It legitimately claimed the rebate. We, thus, do not find any reason to interfere with the impugned judgment of the High Court. - Decided against Revenue.
Issues:
1. Abatement of duty on processed textile fabrics. 2. Interpretation of Rule 96ZQ of the Central Excise Rules, 1944. 3. Applicability of Notification No. 18/99-CE(NT) dated 28.02.1999. 4. Challenge to the vires of the Rule before the Madras High Court. Analysis: 1. The case involves the abatement of duty on processed textile fabrics falling under specific chapters of the Central Excise Tariff Act, 1985. The assessee sought abatement for the closure periods of certain stenters, as per the provisions of Section 3A of the Act and Rule 96ZQ of the Central Excise Rules, 1944. The abatement was claimed for periods when the stenters were not operational, and the duty payable on them was to be paid in advance during specific months. 2. The interpretation of Rule 96ZQ of the Central Excise Rules, 1944 was crucial in this case. The rule specified conditions for claiming abatement, particularly for independent processors not producing specified fabrics for a continuous period of not less than 7 days. The rule also outlined the procedure for claiming abatement under Section 3A of the Act, emphasizing the fulfillment of prescribed conditions. 3. The applicability of Notification No. 18/99-CE(NT) dated 28.02.1999 was a significant point of contention. The notification amended Rule 96ZQ by inserting clause (e), which mandated the payment of duty for the entire period of one month when claiming abatement for a period less than one month. The dispute arose regarding the retrospective application of this clause and its impact on the duty payment requirements for abatement claims. 4. A crucial aspect of the judgment was the challenge to the vires of the Rule before the Madras High Court in a previous case. The High Court had held the Rule to be ultravires the erstwhile Section 3A of the Act. The Supreme Court referenced this judgment to support the respondent's position, highlighting that the respondent was not obligated to pay any duty, especially in a revenue-neutral scenario. The dismissal of the appeal was based on this interpretation and the lack of necessity to interfere with the High Court's decision. In conclusion, the Supreme Court dismissed the appeal, upholding the respondent's legitimate claim for abatement of duty on processed textile fabrics based on the interpretation of relevant rules and notifications, as well as the precedent set by the Madras High Court regarding the vires of the Rule in question.
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