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2017 (12) TMI 940 - AT - Central ExciseN/N. 67/1995-CE, dated 16.03.1995 - clearance of intermediate products, tapes / strips of plastics - It appeared to the department that the said tapes / strips of plastics captively consumed in manufacture of fabrics / sacks are liable to duty - appellant cleared fabrics / sacks (finished goods) claiming SSI exemption under N/N. 8/2003-CE dt. 01.03.2003 as amended - Held that - similar issue decided in the case of Priyal Hosieries, Priya Garments, The Carnataka Knitting Co., M.V. Exports, PVS Knittings, Ajay Vijay Industries, Bhairav Overseas, Anbu Garments, K.N. Tex and Popular Hosiery Factory Versus CCE Coimbatore 2017 (11) TMI 1248 - CESTAT CHENNAI , where it was held that The final products may be made out of the same product or out of different products. Clause (vi) does not contemplate that the manufacturer should manufacture only one final product or that if he manufactures only one product that product itself should be both dutiable and exempted. The intermediate products are eligible for benefit of N/N. 67/95-CE as amended - appeal allowed - decided in favor of appellant.
Issues:
Interpretation of SSI exemption under Notification No.8/2003-CE for HDPE/PP woven sacks/fabrics, applicability of duty on intermediate products, dispute regarding duty liability for intermediate goods used in the manufacture of exempted final products, analysis of Tribunal's decision in a similar case, consideration of proviso clause in Notification No.67/1995-CE for exemption of intermediate products. Analysis: The case involves M/s.Rahuman Packages manufacturing HDPE/PP woven sacks/fabrics, availing SSI exemption under Notification No.8/2003-CE. The dispute arises as HDPE tapes/strips, intermediate products captively consumed by the appellant, were excluded under the notification. The Department demanded duty on these intermediate products, leading to an adjudication order confirming duty demand, interest, and penalties. The Commissioner (Appeals) upheld most of the original order, reducing the penalty. The appellant appealed to the Tribunal, citing a similar case's favorable decision. During the hearing, the appellant's counsel referenced a Tribunal decision in Angu Garments & Others, where duty liability for intermediate goods used in manufacturing exempted final products was discussed. The Tribunal's detailed analysis in that case highlighted the importance of complying with Rule 6 of the Cenvat Credit Rules to determine exemption eligibility for intermediate goods. The Tribunal emphasized that the same final product need not be partly dutiable and partly exempted for Rule 6 to apply, clarifying the misconception adopted by CESTAT. The Tribunal compared the facts of the present case with Angu Garments, noting that both cases involved manufacturing intermediate products captively consumed by the manufacturer, with final products exempt based on location or turnover. Referring to a Supreme Court decision on Notification No.67/1995-CE, the Tribunal concluded that exemption for intermediate products was available. The Tribunal differentiated another case, M/s.Kunnath Textiles, which did not address the proviso clause's implications, unlike the Supreme Court's ruling in M/s. Ambuja Cements Ltd. After careful consideration, the Tribunal applied the Supreme Court's ratio to allow the appeal, stating that intermediate products in the present case were eligible for the benefit of Notification No.67/95-CE. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential benefits as per law. The Tribunal's decision aligned with the legal position established by the Supreme Court, ensuring the exemption for intermediate products under the relevant notification.
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