1990 (11) TMI 263 - AT - Central Excise

Summary

Issues:
1. Benefit of exemption under Notification No. 95/61-C.E. for manufacturing cotton yarn.
2. Refund claim for duty paid from 1st May, 1980 to 16th July, 1981.
3. Approval of classification list for exemption withdrawal based on use of virgin cotton.

Analysis:

Issue 1: Benefit of exemption under Notification No. 95/61-C.E. for manufacturing cotton yarn
The appeal involved the question of whether the respondents were entitled to the benefit of exemption under Notification No. 95/61-C.E. for manufacturing cotton yarn. The case revolved around the use of cotton waste and virgin cotton in the manufacturing process. The department contended that the test results indicated the use of virgin cotton, leading to the withdrawal of the exemption. However, the Tribunal noted that the notification did not specify the exclusive use of cotton waste and allowed the benefit of exemption as the respondents were using cotton waste during the relevant period for which the refund was claimed. The Tribunal emphasized that the language of the notification did not require exclusive use of cotton waste, leading to the dismissal of the appeal.

Issue 2: Refund claim for duty paid from 1st May, 1980 to 16th July, 1981
The respondents also filed a claim for refund of duty paid for the period from 1st May, 1980 to 16th July, 1981, based on the approval of a price list on 12th June, 1981, claiming exemption under Notification No. 95/61-C.E. The Asstt. Collector rejected the refund claim, which was under appeal before the Collector (Appeals). The Collector allowed the refund claim, stating that the respondents were using cotton waste during the relevant period. The Tribunal reviewed the test check reports and allowed the refund claim for the specified period, emphasizing the use of cotton waste by the respondents.

Issue 3: Approval of classification list for exemption withdrawal based on use of virgin cotton
The approval of the classification list allowing the benefit of exemption under Notification No. 95/61 was withdrawn by the Asstt. Collector based on test results indicating the use of virgin cotton in the manufacturing process. The department conducted tests on samples drawn on various dates, showing the presence of both virgin cotton and cotton waste in the manufacturing of yarn. The Tribunal noted that the use of virgin cotton was in a minor quantity compared to cotton waste. Referring to a previous judgment, the Tribunal held that the benefit of exemption could be extended to yarn manufactured using both cotton waste and virgin cotton. The appeal was dismissed as lacking merit.

In conclusion, the Tribunal upheld the benefit of exemption under Notification No. 95/61-C.E. for the respondents, allowed the refund claim for duty paid, and dismissed the appeal regarding the withdrawal of exemption based on the use of virgin cotton in the manufacturing process.