1998 (6) TMI 264 - AT - Central Excise

Summary

Issues:
Appeal regarding denial of benefit under Notification No. 53/87-C.E. on stocks of viscose staple fibre, compliance with conditions of concessional rate of excise duty, application of Chapter X of Central Excise Rules, 1944, subsequent use of artificial staple fibre, comparison with precedent of captive use of yarn by composite mills.

Analysis:
1. The appeal involved the denial of the benefit of Notification No. 53/87-C.E. on stocks of viscose staple fibre by M/s. Malwa Cotton Spinning Mills Ltd. The Notification prescribed a concessional rate of excise duty for artificial staple fibre and tow under specific conditions. The appellants had stocks of such fibre on 1-3-1989, which had not been used for blending with cotton as required by the Notification.

2. The appellant argued that post 1-3-1989, they used the artificial staple fibre in the manufacture of cotton yarn, thereby complying with the terms of the exemption Notification. However, the Respondent maintained that duty was correctly confirmed on surplus stocks not utilized before the withdrawal of the concession.

3. The Tribunal considered the conditional nature of the benefit under the exemption Notification and the requirement for the artificial staple fibre to be used for blending with cotton for manufacturing cotton yarn under Heading No. 52.03. It was noted that the stocks had not been used for the intended purpose by 1-3-1989, when the concessional rate of duty was withdrawn.

4. The analysis delved into the provisions of Chapter X of the Central Excise Rules, 1944, which outlined a detailed procedure for obtaining remission of duty on goods like artificial staple fibre. The rules placed the responsibility on the licensee to ensure proper usage of goods received under concessional rates, with recovery of duty in case of non-compliance.

5. Reference was made to a Tribunal decision regarding captive use of yarn by composite mills, emphasizing the retrospective amendment of Central Excise Rules and the duty implications based on the date of removal of goods. The Tribunal distinguished the facts of the present case from the precedent cited by the appellant, ultimately upholding the denial of benefit and rejecting the appeal.

In conclusion, the Tribunal upheld the decision to demand excise duty on the artificial staple fibre stocks not utilized as per the conditions of the exemption Notification, emphasizing the importance of compliance with prescribed procedures and conditions for concessional rates.