1999 (12) TMI 198 - AT - Central Excise

Summary

Issues:
1. Duty demand confirmed under Rule 9(2) of Central Excise Rules.
2. Allegations of deliberate cutting of sound fabrics into smaller pieces for marketing as 'blouse pieces.'
3. Denial of exemption under Notification No. 6/88.
4. Contention regarding defective nature of the material and reliance on inspection cards.
5. Failure to consider material as defective by the Addl. Collector.
6. Allegation of suppression of facts and denial of benefit of notification.
7. Interpretation of relevant legal provisions and precedents.
8. Decision on the appeal and granting benefit of doubt to the appellants.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Madras arose from a duty demand confirmed under Rule 9(2) of the Central Excise Rules, linked with the proviso to Section 11A of the Central Excise Act, 1944. The appellants, manufacturers of man-made fibers, faced allegations of deliberately cutting sound fabrics into smaller pieces to market them as 'blouse pieces,' leading to a duty demand of Rs. 68,312.52. The Addl. Collector contended that the fabric cutting was intentional, denying the appellants the benefit of an exemption under Notification No. 6/88, dated 19-1-1988.

The appellants argued that the smaller pieces were defective fents arising from the manufacturing process, supported by inspection cards indicating the defective nature of the material. They maintained that trimming the fents to uniform length for marketability did not change their nature, and thus, they were entitled to the exemption. However, the Addl. Collector focused on the higher selling prices of the pieces to allege deliberate cutting from sound fabrics, leading to the duty demand.

During the proceedings, the appellants referenced a Tribunal judgment on a similar issue, emphasizing the determination of fents' value under Section 4 rather than equating it with the parent fabric's value. The Tribunal, after considering various legal aspects and precedents, including the interpretation of 'rags' and 'fents,' found that the appellants had indeed cut damaged fents into smaller pieces for marketability, qualifying for the exemption under Notification No. 6/88.

Ultimately, the Tribunal granted the benefit of doubt to the appellants, setting aside the Addl. Collector's order and allowing the appeal with consequential relief, in accordance with the law. The decision highlighted the importance of proper interpretation of legal provisions, adherence to precedents, and the need to consider all relevant evidence before confirming duty demands or denying exemptions.