1998 (6) TMI 183 - AT - Central Excise

Summary

Issues:
1. Special procedure under Rules 96V and W of Central Excise Rules for composite mills using captively manufactured yarn for fabric production.
2. Allegation of non-inclusion of yarn duty in the assessable value of cotton fabrics leading to differential duty demands.
3. Show cause notices issued under Rule 10A and Rule 10 for duty demands.
4. Time-barred show cause notice under Rule 10 for a specific appellant.

Issue 1 - Special Procedure under Rules 96V and W:
The judgment dealt with composite mills manufacturing cotton yarn for captive use in fabric production, allowing them to follow a special procedure under Rules 96V and W of Central Excise Rules. This procedure permitted the payment of duty on captively consumed yarn at the rate applicable to cotton fabric itself. The appellants had opted for this special procedure and filed approved price lists for cotton fabric under Item 19-I of the old Central Excise Tariff.

Issue 2 - Allegation of Non-Inclusion of Yarn Duty:
The case involved allegations against the appellants for not including yarn duty in the assessable value of cotton fabrics, as required under Rule 96 of Central Excise Rules. Show cause notices were issued, demanding differential duty amounts for the period specified. The Assistant Collector and the Collector (Appeals) upheld the demands, emphasizing the necessity to include yarn duty in the fabric's assessable value.

Issue 3 - Show Cause Notices under Rule 10A and Rule 10:
Show cause notices were issued under Rule 10A and Rule 10 for duty demands against different appellants. The judgment clarified that the demand under Rule 10A could be converted into a Rule 10 demand without issuing a fresh notice, as established in previous Tribunal decisions. The grounds for short levy were deemed valid, supporting the demand under Rule 10.

Issue 4 - Time-Barred Show Cause Notice:
Regarding a specific appellant, Raipur Manufacturing Company, a show cause notice issued under Rule 10 was contested as time-barred. The judgment acknowledged the time limitation under Rule 10 at the relevant time and restricted the demand to the period within the statutory limitation, highlighting the importance of the limitation period applicable at the time of the notice.

In conclusion, the judgment upheld duty demands for most appellants, emphasizing the necessity of including yarn duty in the assessable value of cotton fabrics. It clarified the validity of demands made under Rule 10A and Rule 10, with a specific ruling on the time-barred nature of a show cause notice for Raipur Manufacturing Company. The decision provided detailed reasoning based on relevant legal precedents and statutory provisions, ensuring clarity on the application of excise duty regulations in the context of composite mills and fabric production.