2015 (3) TMI 378 - AT - Central Excise

Imposition of duty on manufacture of shawls - Held that - In the present case, the shawls have been woven directly from the yarn in running length and dividing lines have been provided between shawls so that, they can be cut, packed and marketed. There is no evidence of any fabric having emerged at the intermediate stage. Therefore, the ratio of the decision in the case of Amristar Swadeshi Woollen Mills (2004 (3) TMI 624 - CESTAT, NEW DELHI) would squarely apply. - Decided in favour of assessee.

Summary

Issues:
- Duty demands on shawls manufactured under Rule 57F(4) procedure
- Imposition of penalties on the appellant

Analysis:

Issue 1: Duty demands on shawls manufactured under Rule 57F(4) procedure
The appeal was against the Order-in-Appeal confirming duty demands on shawls manufactured by the appellant under Rule 57F(4) procedure. The appellate authority had upheld duty demands for specific periods and imposed penalties on the appellant. The appellant contended that the shawls were directly woven from yarn without any emergence of fabric at the intermediate stage. Citing a precedent involving woollen blankets, the appellant argued that no fabric arises during the intermediate stage of manufacturing. The Revenue, represented by the Additional Commissioner, supported the lower authorities' findings. The Tribunal examined the submissions and observed that the shawls were woven directly from yarn with dividing lines for cutting, packing, and marketing, without any evidence of fabric emerging at the intermediate stage. Relying on the precedent cited by the appellant, the Tribunal allowed the appeals by setting aside the impugned orders.

Issue 2: Imposition of penalties on the appellant
Apart from the duty demands, penalties of specific amounts were imposed on the appellant. However, the Tribunal's decision to allow the appeals and set aside the impugned orders implies that the penalties imposed were also overturned. The Tribunal's ruling focused on the absence of fabric emergence at the intermediate stage of manufacturing, aligning with the appellant's argument and the precedent cited. Consequently, the penalties imposed on the appellant were deemed unwarranted in light of the findings related to the main issue of duty demands on shawls manufactured under Rule 57F(4) procedure.