9911796707
TMI Blog2008 (7) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... 97, the appellants had cleared processed fabrics using fabrics as input and cleared the finished goods availing deemed credit in terms of Notification No. 29/96-C.E. (N.T.) dt. 3-9-96. The original authority found that the appellants were not eligible for the benefit of deemed credit and demanded an amount of Rs. 1,04,510/- equal to the deemed credit taken and utilized. He also imposed a penalty of Rs. 2000/- on the appellants under Rule 173Q of the Central Excise Rules, 1944. In passing the impugned order, the Commissioner (Appeals) relied on the Explanation II of the Notification to the effect that the provisions of the same did not apply where processed fabric itself was as an input for further processing. 3. Ld. Counsel for the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be available under sub-rule (1) of rule 57A. He submits that the said Trade Notice issued at the time of introduction of Notification No. 29/96-C.E. had clarified that assessees like appellants who received partially processed fabrics and cleared them on payment of duty after final processing, would be eligible credit of duty paid on partially processed fabrics. The above paragraph which was clarified also in the Vandana Dyeing Pvt. Ltd. (supra) was to the effect that manufacturer of processed fabrics could avail input credit under sub-rule (1) of Rule 57A as well as deemed credit on the processed fabric. 4. Ld. SDR relies on the Explanation II appended to Notification No. 29/96 which reads as follows :- (ii) for removal of dou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the C.E.R. As per para 5.2 of Trade Notice No. 90/96 of the Commissionerate issued on the basis of clarification received from the Board, deemed credit will be inapplicable to a manufacturer who availed any credit of duty under any notification issued under sub-rule (1) of Rule 57A of C.E.R. The only exception is where the inputs are processed fabrics themselves. From the above provisions of the statute and the Trade Notice, it is abundantly clear that when processed fabrics are manufactured and cleared using partially processed fabrics as inputs, the manufacturer will be eligible for input credit on the partially processed fabrics and deemed credit on the processed fabrics cleared. In view of the above legal position, the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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