2003 (10) TMI 86 - AT - Central Excise

Summary

Issues:
1. Recovery of central excise duty and penalty under Rule 9(2) of Central Excise Rules.
2. Confiscation of specific quantities of yarn.
3. Interpretation of Notification 34/94-C.E. regarding exemption of textured yarn.
4. Claiming benefit of notification and alleged suppression of facts.
5. Application of limitation period for demand of duty.

Analysis:
1. The Commissioner ordered recovery of central excise duty and imposed penalties on two entities under Rule 9(2) of the Central Excise Rules. The order also included confiscation of specific quantities of yarn. The appellants challenged this order, leading to the present appeal.

2. The case involved a complex scenario where a company obtained duty-free partially oriented yarn (POY) under a DEEC license and intended to export texturised yarn made from it. The movement of POY from one unit to another for processing raised questions about compliance with excise rules and duty payment obligations.

3. The central issue revolved around the interpretation of Notification 34/94-C.E., which exempts textured yarn from excise duty if made from non-textured yarn imported under the Duty Exemption Scheme. The appellants argued that the notification's wording should cover locally procured yarn under the scheme, citing a Supreme Court decision for support.

4. The department contended that the notification specifically refers to imported yarn under the scheme, excluding locally manufactured yarn from its purview. It was alleged that the appellants suppressed facts by claiming the benefit of the notification while dealing with indigenous yarn, invoking a larger limitation period for demand.

5. The tribunal analyzed the notification's language and previous case law to determine its scope. It concluded that the notification's wording limited the exemption to imported filament yarn, excluding locally procured yarn. The tribunal found that the appellants failed to substantiate their claim of disclosing all relevant facts, leading to the rejection of their appeal and upholding the Commissioner's order.

In conclusion, the judgment upheld the Commissioner's decision regarding duty recovery, penalties, and confiscation, emphasizing the importance of accurate disclosure and compliance with excise rules to avoid penalties and limitations on duty demands.