2019 (12) TMI 544 - AT - Central Excise

Benefit of N/N. 14/2002-CE dated 01 Mar 2002 - appellant is a composite mill engaged in spinning of cotton yarn from cotton fibres, weaving of grey fabrics and processing of said grey fabrics with the aid of power - legal fiction created in law - HELD THAT - The issue is no longer res-integra as settled by the judgment of Hon ble Supreme Court in the case of M/S. SPORTS LEISURE APPAREL LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA 2016 (8) TMI 128 - SUPREME COURT where it was held that explanation II to the said exemption Notification Nos. 14/2002 and 15/2002 create legal fiction and that was the precise purpose for which this explanation was added. It is trite law that a fiction created by a provision of law is to be given its due play and it must be taken to its logical conclusion. Benefit cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of benefit of Notification No. 14/2002-CE to composite mills.

Analysis:
The judgment revolves around the eligibility of composite mills to avail the benefit of Notification No. 14/2002-CE. The appellant, a composite mill engaged in various activities, availed the benefit of the notification during a specific period but faced a demand notice for recovery of differential duty, interest, and penalty. The appeal was filed against the order confirming the demand, which was rejected by the Commissioner of Central (Appeals), leading to the present appeal. The key contention was whether the appellant was eligible for the notification's benefit. The appellant argued citing a Supreme Court judgment that the fiction created in the law should be given due effect, making them eligible for the benefit. The Revenue accepted the applicability of the Supreme Court judgment to the case.

The Tribunal analyzed the issue in light of the Supreme Court judgment in the case of Sports & Leisure Apparels Ltd. The Court explained the new excise duty scheme for the textile sector introduced in the Union Budget 2002, providing manufacturers with the option to choose between two schemes offering exemption or concessional rates based on availing Modvat credit. The Court highlighted that all fibres and yarns were deemed to have been duty paid without requiring documentary proof, emphasizing the legal fiction created by Explanation II of the notification. The Tribunal held that the benefit of the duty rate should be allowed without insisting on documentary proof of duty payment, aligning with the intention behind the exemption notification.

Additionally, the Tribunal noted that a Larger Bench of the Tribunal had previously answered a reference in favor of the assessees, further supporting the appellant's position. Relying on the precedent set by the Supreme Court and the Tribunal's earlier decision, the Tribunal found no merit in the impugned order. Consequently, the Tribunal set aside the order, allowing the appeal with any consequential relief as per the law. The judgment emphasized the importance of giving due effect to legal fictions and interpreting provisions to their logical conclusion, ultimately ruling in favor of the appellant based on established legal principles and precedents.