2017 (11) TMI 223 - AT - Central Excise

Benefit of N/N. 15/2002-CE dated 1.3.2002 - whether the blankets falling under Chapter 63 were being manufactured out of yarn, which has been used in the manufacturer of fabrics and further being used in the manufacture of blankets, the benefit can be extended to them or not? - Explanation added in the said notification vide amending notification No.37/02-CE dated 3.7.2002 - Held that - where the goods are manufactured alongwith processing of fabrics and weaving or knitting or crocheting of fabrics within the same factory, the conditions of the notification have to held as having been satisfied if the said goods are manufactured from textile yarns on which the duty has been paid - It also stands clarified in the said notification that explanation was added shall have retrospective effect - denial of benefit unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Notification No.15/2002-CE regarding concessional rate of duty for goods falling under Chapter 63.
2. Whether the manufacturing process of Acrylic Mink Blankets qualifies for the concessional rate of duty.
3. Impact of the amendment in Notification No.37/02-CE on the eligibility for concessional duty rate.

Analysis:
1. The case involved the interpretation of Notification No.15/2002-CE, which provided a concessional rate of duty for goods under Chapter 63 subject to certain conditions. The main contention was whether the manufacturing process of Acrylic Mink Blankets fulfilled the conditions specified in the notification.

2. The appellant was engaged in manufacturing Acrylic Mink Blankets using a process involving various steps from yarn to the final product. The Revenue argued that since no processed fabrics existed before the manufacturing of blankets, the condition of the notification was not satisfied. A show cause notice was issued based on this interpretation, leading to a demand for payment.

3. During adjudication, the appellant highlighted an amendment in Notification No.37/02-CE, which clarified the conditions for concessional duty rate eligibility. The explanation added in the amendment stated that if goods are manufactured from textile yarns on which appropriate duty has been paid, the conditions of the notification are considered satisfied. The appellant argued that since the yarn used was duty paid, they should qualify for the concessional rate of duty.

4. The adjudicating authority initially rejected the appellant's contention, emphasizing the need for manufacturing blankets from knitted fabrics to qualify for the concessional rate. However, the Tribunal found that the blankets were indeed manufactured from yarn that had been used in the production of fabrics and further in the blankets, meeting the requirements of the amended notification. The Tribunal held that denying the benefit of the notification would go against legislative intent and overturned the decision, allowing the appeal with consequential relief.