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1990 (10) TMI 207 - AT - Central Excise
Issues:
1. Whether interest on Central Excise duty on yarn used in the manufacture of cotton fabrics exported under Bond is recoverable according to Rule 49A of the Central Excise Rules. Analysis: The case involved a dispute regarding the recovery of interest on Central Excise duty on yarn used in manufacturing cotton fabrics exported under Bond, as per Rule 49A of the Central Excise Rules. The appellants did not appear for the hearing but requested a decision based on their written submissions. The main issue was whether interest was payable on the duty for yarn used in fabric manufacture, as demanded by the department. The Collector (Appeals) had limited the demand for interest to six months, which was contested by the appellants. Rule 49A of the Central Excise Rules outlined the collection of duty on cellulosic spun yarn and cotton yarn used in manufacturing cotton fabrics. The rule specified conditions for payment of duty and interest on yarn, allowing for deferment of duty payment until fabric duty payment. However, certain conditions, including payment of duty with interest, were imposed. Rule 52 required assessment by a proper officer for goods intended for home consumption, indicating that duty and interest on yarn were payable when goods were removed under Rule 52 for home consumption. The Tribunal emphasized that since the fabrics were exported under bond without payment of duty, Rule 52 was not applicable as goods were not removed for home consumption. Consequently, the duty could not be ascertained, and interest could not be quantified without assessment. The discharge of the export bond confirmed that no duty was payable on the fabrics or the yarn used in their manufacture, as per Explanation 2(ii) of Rule 13. Referring to a similar case precedent, the Tribunal concluded that Rule 49A did not authorize the department to charge interest when fabrics were exported without duty payment under Rule 13. Therefore, the Tribunal held that interest could not be charged in the present case, and the appeal was allowed, overturning the lower authorities' orders.
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