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2016 (5) TMI 1050 - AT - Central ExciseWhether grey fabric manufactured by the appellants and sent by them to the job worker is required to be treated as intermediate products so as to invoke provision of rule 16(B) - Held that - the issue is no more res integra. By following the decision of Tribunal in the case of M/s. Valentino Syntex Pvt. Ltd. Vs. CCE Jaipur 2008 (2) TMI 806 - CESTAT, NEW DELHI , the grey fabric manufactured by the assessee out of duty paid yarn and cleared to the job worker for further processing and subsequently received and cleared on payment of duty are required to be extended the benefit of Rule 16(B) of Central Excise Rules by considering the same as intermediate goods. The said decision stands subsequently followed by the Tribunal in the case of Sangam Spinners Vs. CCE Jaipur 2015 (11) TMI 1029 - CESTAT NEW DELHI . - Decided in favour of appellant
Issues:
Interpretation of Rule 16(B) regarding treatment of grey fabric as intermediate goods for duty payment. Analysis: The judgment by the Appellate Tribunal CESTAT NEW DELHI involved multiple appeals by both the assessee and the Revenue, arising from the same impugned order passed by the Commissioner. The core issue revolved around the treatment of grey fabric manufactured by the assessee as intermediate goods under Rule 16(B) of the Central Excise Rules. The assessee, engaged in manufacturing grey fabric from duty paid yarn, cleared the fabric to job workers for further processing and subsequently received it back for export after paying duty using the credit availed on yarn. The Revenue contended that the grey fabric should be considered final excisable goods and required duty payment. This disagreement led to the initiation of proceedings against the assessee via a show cause notice, culminating in the impugned order by the Commissioner. The Adjudicating Authority in the impugned order noted that the grant of permission under Rule 16(B) by the Commissioner was incorrect. However, he confirmed only the differential duty payable on the grey fabric and actually paid on the final processed fabric. Notably, in the case of M/s. Galundia Textile Pvt. Ltd., where the duty paid on the final processed fabric was less than required on the grey fabric, the demand was dropped. The Adjudicating Authority refrained from imposing penalties on the assessee due to the incorrect permission granted by the Commissioner. Both the assessee and the Revenue appealed against different aspects of the order. The Tribunal, after considering precedents such as M/s. Valentino Syntex Pvt. Ltd. Vs. CCE Jaipur and Sangam Spinners Vs. CCE Jaipur, concluded that the grey fabric manufactured by the assessee and processed by job workers should be treated as intermediate goods under Rule 16(B). Therefore, the appeals of the assessee were allowed. Consequently, as the assessee's appeals succeeded, the Revenue's appeals were deemed meritless for non-imposition of penalty or confirmation of differential duty, leading to their rejection. The Tribunal disposed of all appeals accordingly, providing clarity on the interpretation of Rule 16(B) in the context of grey fabric manufacturing and duty payment.
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