2002 (11) TMI 216 - AT - Central Excise

Summary

Issues:
1. Entitlement to benefit of Notification No. 29/96 for deemed credit on inputs used in manufacturing grey fabric.
2. Denial of benefit for grey fabric as an "input" in the Notification qualifying for deemed credit.

Analysis:
1. The first issue in these appeals revolved around the entitlement of the appellant to the benefit of Notification No. 29/96 for deemed credit on inputs used in the manufacture of grey fabric. The appellant's claim for such credit was initially denied in Appeal No. E/2434/2001-D on the grounds that the final product did not fall under the specific sub-heading mentioned in the notification. However, the appellant pointed out a corrigendum that included final products falling under Heading Nos. 5801 and 5802, which encompassed the appellant's product. The Tribunal agreed with the appellant, stating that since Heading 5801 was included, there was no justification for denying the benefit claimed. The Tribunal upheld the appellant's contention and allowed the benefit, subject to verification by the Assistant Collector on the issue of unjust enrichment.

2. The second issue involved the denial of benefit in Appeal No. E/2092/2001-D, where the appellant was denied the benefit of Notification No. 29/96 on the grounds that grey fabric was not considered an "input" qualifying for deemed credit. The appellant argued that the inputs referred to in the notification had indeed been used in the manufacture of grey fabric. This argument was supported by Board's Circular No. 243/77/96, dated 3-9-96, which clarified the rate of deemed credit for fabrics, including grey fabric. The Circular specified the deemed credit rates for different types of fabrics and inputs, confirming the appellant's entitlement to the benefit claimed. The Tribunal, in light of the Circular, set aside the impugned order and allowed the appeal, recognizing the appellant's right to deemed credit on the inputs used in manufacturing grey fabric.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, granting the benefit of Notification No. 29/96 for deemed credit on inputs used in manufacturing grey fabric and rejecting the denial of such benefit based on the classification of grey fabric as an "input." The judgments highlighted the importance of specific notifications and circulars in determining eligibility for deemed credit and emphasized the need for thorough verification to prevent unjust enrichment.