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2000 (10) TMI 414

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..... rise to the appeal are stated as under : The appellants are engaged in the manufacture of yarn classifiable under Chapter 55 of the Schedule to the CETA. They received duty paid single yarn for doubling and cleared such doubled yarn without payment of duty during the period 13-7-96 to 7-11-96 and thereby evaded the payment of duty of Rs. 2,93,701/-. They were accordingly served with show cause notice and called upon to pay the duty amount for that period. But they however contested correctness of the show cause notice and denied their duty liability on the ground that doubling of the yarn did not amount to manufacture and that they were entitled to the benefit of provisions of Rule 173H for having filed the declaration D-3 before the com .....

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..... f the amount of duty, confirmed on the appellants has not also been disputed before us. Therefore, for the period in question, the appellants were liable to pay the duty amount of Rs. 2,93,710/- and that they have been rightly called upon to pay the same. 7. What has been seriously contested by ld. Counsel before us is the denial of benefit of Modvat by the authorities below. According to the counsel, when the appellants submitted the declaration in form D3, under the rules, they were never informed by the Excise Department that they were liable to pay duty on doubled yarn and as such they remained under the belief that they were entitled to clear the doubled yarn without payment of duty and for that reason they also did not separately fi .....

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..... ittedly the appellants initially filed a declaration in D3 and were under the impression that the benefit of Rule 173H of the Rules was available as their activity of doubling the yarn from single yarn did not amount to manufacture. There is nothing on the record to indicate that they were informed by the Department that their case was not covered under Rule 173H. If they were informed about the non-availability of benefit of Rule 173H, they would have taken proper steps for claiming Modvat credit in accordance with Rule 57G of the Rules. They admittedly used duty paid single yarn for manufacturing the doubled yarn. Therefore their claim for Modvat credit deserves to be reconsidered by the adjudicating authority keeping in view the facts an .....

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