2010 (3) TMI 613 - AT - Central Excise

Cenvat/Modvat Composite mill- Notification No. 29/96-C.E. prescribing composite mill as one having spinning facility. Definition changed by Notification No. 28/2000-C.E., dated 31.03.2000 where requirement of spinning facility dropped. Definition changed once again by Notification No. 7/2001-C.E. (N.T.), dated 1.3.2001 to include spinning facility in composite mill. Assessee a composite mill according to definition during 2000-01 hence department s view that only 40% credit available and not 50% credit as available to non-composite mill. Held that - in the light of the decision of W.P.I.L Ltd. v. CCE, 2005 -TMI - 47237 - SUPREME COURT OF INDIA, where held that when later notification continues with exemption available before intervening period, exemption cannot be said to have been withdrawn. Ratio applicable on all fours. Assessee not composite mill during intervening period 2000-01. Assessee s appeal allowed.

Summary

Issues: Classification of a mill as a 'composite mill' under different notifications; Entitlement to duty credit; Interpretation of notification changes over time.

Analysis:
1. Classification of a mill as a 'composite mill' under different notifications: The case involved the classification of the appellants' mill as a 'composite mill' under various notifications. Initially, under Notification No. 29/96-C.E., a 'composite mill' was defined as a manufacturer engaged in processing fabrics with power along with spinning of yarn and weaving/knitting/crocheting within the same factory. However, Notification No. 28/2000 changed this definition to exclude the spinning facility requirement. Subsequently, Notification No. 7/2001 reintroduced the spinning facility requirement. The dispute arose as the appellants, during the period 2000-01, considered themselves a 'non-composite mill' under the changed definition, leading to a duty demand by the department.

2. Entitlement to duty credit: The department contended that the appellants were entitled to only 40% duty credit as a 'composite mill' under Notification No. 28/2000, not 50% as claimed by treating themselves as a 'non-composite mill'. The duty demand of Rs. 45,249/- was raised and confirmed by the adjudicating authority and upheld by the Commissioner (Appeals), prompting the appeal before the Tribunal.

3. Interpretation of notification changes over time: The appellants argued that despite the change in the definition of a 'composite mill' under Notification No. 28/2000, they should be considered a 'non-composite mill' during the period 2000-01. They relied on the Supreme Court's decision in W.P.I.L Ltd. v. CCE, Meerut, which held that if the consistent policy of granting exemption continues, it cannot be said to have been withdrawn. The Tribunal, following this precedent, set aside the impugned order, accepting the appellants' contention and allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellants, holding that they should be treated as a 'non-composite mill' even during the period 2000-01, based on the interpretation of the notification changes and the consistent policy of granting exemptions as established by the Supreme Court's decision.