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2017 (2) TMI 531 - HC - Central ExciseWhether deemed credit is admissible on inputs Grey Fabrics though Grey fabrics is not a declared input under N/N.6/2002-CE(NT) dated 01.03.2002? - Held that - reliance placed in the case of C.C.E. vs. M.B. Dyers 2010 (2) TMI 361 - DELHI HIGH COURT , where it was held that the processed fabrics are the final products containing yarn/fabric and, therefore, it fulfils the requirements of Rule 11 of CCR, 2002 - the requirement of Rule 11 of the aforesaid rules being satisfied the authority has allowed the Cenvat credit - appeal allowed - decided in favor of assessee.
Issues:
- Admissibility of deemed credit on inputs 'Grey Fabrics' under Notification No.6/2002-CE(NT) dated 01.03.2002. Analysis: The case involves an appeal under Section 35G of the Central Excise Act, 1944 against an order by the customs and central excise authority. The main question raised is whether deemed credit is permissible on 'Grey Fabrics' despite not being declared as an input under Notification No.6/2002-CE(NT) dated 01.03.2002. The appellant, an independent fabric processor, received grey cotton fabrics and cleared processed fabrics by paying excise duty, availing the benefit of the said notification and claiming deemed credit. The issue has been previously addressed in other cases where deemed credit was allowed for processed fabrics as inputs. The appellant's counsel referred to a decision of the Delhi High Court in C.C.E. vs. M.B. Dyers, where it was concluded that processed fabrics qualify as final products containing yarn/fabric, meeting the requirements of Rule 11 of the Cenvat Credit Rules, 2002. Rule 11 empowers the Central Government to notify goods for deemed CENVAT credit, allowing credit even if the declared inputs are not directly used in manufacturing final products but are contained in them. As Rule 11's conditions were met, the authority granted Cenvat credit, ruling in favor of the assessee and against the revenue. In conclusion, the appeal was disposed of with a decision in favor of the assessee, allowing deemed credit on 'Grey Fabrics' under the specified notification. No costs were awarded in this matter.
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