2008 (7) TMI 205 - AT - Central Excise

Cotton yarn manufactured is put on open cheese form at the intermediate stage before conversion into plain straight reel hanks - cotton yarn in plain straight reel hanks was exempt whether duty is payable at the spindle stage or before conversion to hank yarn - in view of Circular No. 72/88-CX-6 demands is to be kept pending till a final decision is communicated in this matter demand raised without taking notice of final communication (Circular No. 628 /19/2002) is not justified

Summary

Issues: Duty liability on intermediate goods, interpretation of Board's circulars, consideration of subsequent circular in decision-making, refund of pre-deposit amount.

Analysis:
1. Duty liability on intermediate goods: The case involved a dispute regarding the duty liability on cotton yarn put on open cheese form at the intermediate stage before conversion into plain straight reel hanks. The question was whether duty should be charged at the spindle stage or when the yarn is put on cheese, cops, cones, etc. The Appellants argued that duty should not be charged at the intermediate stage to maintain the exemption granted to hank yarn used in the hand-loom sector. The Board's Circular No. 72/88-CX-6 highlighted this issue, stating that precautionary demands should be raised pending a final decision. However, the demand against the Appellants was decided without waiting for the final communication, leading to a challenge.

2. Interpretation of Board's circulars: The Appellants pointed out a subsequent Circular No. 628/19/2002-CX, dated 19-3-2002, which clarified the Board's view on charging duty on intermediate goods. This circular accepted that charging duty on intermediate goods would nullify the exemption to hank yarn. The Appellants argued that the impugned order and the lower appellate Authority did not consider this subsequent circular, leading to an incorrect decision against them.

3. Consideration of subsequent circular in decision-making: The Tribunal observed that the Authorities below had decided against the Appellants without considering the final communication in the Circular dated 19-3-2002. As a result, the impugned order and the order-in-original were set aside, and the matter was remanded to the original Authority for a fresh decision in light of the Board's subsequent circular. This decision highlighted the importance of considering all relevant circulars and communications in making legal judgments to ensure fairness and accuracy.

4. Refund of pre-deposit amount: Additionally, the Appellants requested a refund of the pre-deposit amount made during the legal proceedings. The Tribunal, considering the remand of the case and the setting aside of the demand order, decided that there was no requirement to retain the pre-deposited amount. Therefore, the Tribunal ordered the refund of the pre-deposited amount along with any accrued interest, deducting bank charges, to be refunded to the Appellants by the Assistant Registrar, with due intimation to the jurisdictional Commissioner. This decision ensured fairness and compliance with legal procedures regarding financial deposits in legal cases.