2009 (4) TMI 173 - AT - Central Excise

Classification and Exemption under Notification No. 67/95- Respondents are manufacturers, inter alia, of rubberized textile fabric, dipped tyre cord fabrics and tarpaulins out of unprocessed fabrics of man-made fabric yarn (classified by them under CETSH 5911.90), an intermediate product captively consumed - Held that the goods in question are eligible to be classified under Chapter 54 and not under Chapter 59 which covered only made-ups - In the present case, the inputs were leviable to basic duty and no additional duty of excise was leviable thereon and, therefore, the inputs cannot be considered as exempt from the whole of additional duty of excise leviable thereon Hence exemption under Notification No. 67/95 is available

Summary

Issues involved:
Classification of goods under Chapter 54, benefit of Notification No. 67/95 for captive consumption, appeal against the Commissioner's order.

Classification of goods under Chapter 54:
The case involved the classification of goods manufactured by the appellant under Chapter 54. The Revenue contended that the goods should be classified under Chapter 54.06, while the appellant argued for classification under sub-heading 5911.90. The Tribunal referred to the decision in CCE Nagpur v. Simplex Mills Co. Ltd., where the Supreme Court clarified that certain goods fell under Chapter 54 and not Chapter 59. The Tribunal accepted the Revenue's stand on classification under Chapter 54 for the goods in question.

Benefit of Notification No. 67/95 for captive consumption:
The appellant had availed exemption under Notification No. 67/95 for captive consumption of certain goods. The Revenue challenged the extension of this benefit by the Commissioner. The Tribunal held that the benefit of the captive consumption notification cannot be denied unless the final products manufactured are exempt from the whole of duty of excise or additional duty of excise leviable. Since the inputs were leviable to basic duty and no additional duty of excise was leviable, the Tribunal concluded that the appellant was entitled to the benefit of Notification No. 67/95.

Appeal against the Commissioner's order:
The Revenue appealed against the Commissioner's order, which had dropped the demand for duty, interest, and penalty raised in the show-cause notice. The Tribunal partially allowed the Revenue's appeal by accepting the classification of goods under Chapter 54 but upheld the appellant's eligibility for the benefit of Notification No. 67/95. Additionally, the Tribunal allowed the appellant's appeal against the denial of the benefit of captive consumption, holding that they were entitled to the benefit.

In conclusion, the Tribunal upheld the classification of goods under Chapter 54, affirmed the appellant's entitlement to the benefit of Notification No. 67/95 for captive consumption, and partially allowed the Revenue's appeal while fully allowing the appellant's appeal against the denial of the benefit of captive consumption.