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TMI Blog2013 (8) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... the condition no. 1 i.e. in availing CENVAT credit on inputs/capital goods. Therefore, goods were cleared without payment of duty at Sr.no.10 of Notification 14/2002. These goods were received by their Pawane unit and the same were deemed to be duty paid as no credit on inputs/capital goods have been availed by their Mahape unit. - order set aside. - Decided in favor of assessee. - E/2642/04 - A/63/13/EB/C-II - Dated:- 20-12-2012 - Ashok Jindal And S K Gaule, JJ. For the Appellants : Shri M H Patil, Adv. with Shri Prabhakar Shetty, Adv. For the Respondent : Shri Amand Shah, Addl. Comm (AR) PER : Ashok Jindal The appellant namely Suditi Industries has filed this appeal against impugned order wherein duty along with interest has been demanded from the appellant by denying the exemption under Notification 14/2002-CE at serial no.12 and penalties under Rule 25 of Central Excise Rules, 2002. 2. The facts of the case are that the appellant had two units, one at Mahape, wherein unprocessed cotton knitted fabrics are manufacture and another at Pawane, wherein grey fabrics are subjected to processing. Prior to 1.3.2002, the said cotton knitted fabrics processed and unpro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Notfn. No.14/2002-CE. Therefore, appellants are entitled for exemption under Sr.No.10 12 of the said Notification. He further submitted that it has been clarified under Explanation II of the said Notification that textile yarn or fabrics shall be deemed to have been duty paid, even without production of document evidencing payment of duty thereon. There was no stipulation under the said Notification that the exemption there under would not be available if textile yarn or fabrics are proved to be non-duty paid. Yarn and fabrics are deemed to have been duty paid, unconditionally, in relation to the said Notification. In view of the above facts, processed fabrics manufactured from grey fabrics is deemed to have been manufactured from duty paid fabrics and, hence, eligible for exemption. It is further submitted that the appellants at Mahape Unit used bought duty paid yarn for manufacture of grey Knitted fabrics (unprocessed) and credit of CENVAT neither on yarn nor on capital goods was taken. Likewise, at their Pawane unit, the Appellants received grey fabrics under Sr.No.10 of Notfn. No. 14/2002-CE and processed fabrics were cleared under Sr.No.12 of the said Notfn. The said unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants. 5. He further submitted that under the provisions of Section 37B of CEA, CBEC had issued the said instructions dated 26.9.2002, 8.7.2002 10.12.2002 solely for the purpose of maintaining uniformity in the availability of exemption under the said Notification No. 14/2002-CE and to restrain the Dept. from levy of duty on unintended items. 6. On the other hand, Shri Amand Shah, Additional AR strongly opposed the contention of the ld. counsel and submitted that the decision of Dhiren Chemical Industries (supra) is applicable to the present case as the grey fabrics were received from the appellant's Mahape unit to Pawane unit by availing exemption at Sr.no.10 of Notification 14/2002. The exemption under Sr.no.12 therein cannot be allowed to their Pawane unit as grey knitted fabric was clearly identifiable as duty paid exemption is not available, and the said decision has been followed in series of cases. 7. Heard both sides. 8. After hearing both sides, we find that in this case, the exemption under Notification 14/2002 at Sr.no.12 was denied to the appellant on the premise that the input (unprocessed knitted fabric) cleared from the Mahape unit have been received by Pawa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Special Importance) Act, read with any notification for the time being in force , or the additional duty of customs leviable under section 3 of the Customs Tariff Act, 1975, as the case may be, has been paid and no credit of the duty paid on inputs or capital goods has been taken under rule 3 or rule 11 of the CENVAT Credit Rules, 2002. Xxxx xxxx xxxx [emphasis supplied] From the above it is clear that both the conditions and words used are on which the appropriate duty of excise leviable . read with any notification for the time being in force .. has been paid. 9. We further find that as per letter F.No.344/1/2002-TRU dated 28.2.2002, it has been clarified that the option under Notification No.14/2002_CE is to exercised by a manufacturer of the products mentioned in the said Notification, for all the clearances and it is not permissible that on some clearances he would like to pay duty and remove the others without payment of duty. We further find that there was no clarification anywhere that if the fabrics mentioned in the Notification No.14/2002-CE were manufactured from yarn, which could clearly be recognized as non-duty paid, the benefit under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess the manufacturer has paid, the correct amount of excise duty, he is not entitled to the benefit of the exemption notification. 7. Where the raw material is not liable to excise duty or such duty is nil, no excise duty is, as a matter of fact, paid upon it. To goods made out of such material the notification will not apply. 11. We have examined the decision of the Apex Court in Dhiren Chemical Industries wherein the Hon'ble Apex Court has interpreted on which appropriate duty of excise has already been paid and in this case the expression used in condition no.1 and 3 is on which appropriate duty of excise leviable read with any Notification for the time being in force has been paid under Notification 14/2002. The ratio of Dhiren Chemical Industries (supra) will not apply to the present case. 12. We further find that the issue has come up before this Tribunal in the case of Simplex Mills Co. Ltd. 2005 (189) ELT 228 wherein this Tribunal observed as under: It is the contention of the Department that appellants are liable to pay 24% ad valorem duty on the fabrics whereas the appellants are claiming concessional rate of duty under Notification no. 14/2002-C.E. dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the adjudicating Commissioner's arguments to the contrary are not at all convincing. The appellants have also brought to our notice that in the case of other manufacturers, similarly situated, other Commissioners have allowed the duty benefit under Notification no. 14/2002-C.E. applying the aforesaid clarification issued by the C.B.E. C. The adjudicating Commissioner has discarded the said orders saying that these decisions are not binding on her. She has also failed to take note of the Finance Minister's Budget Speech clarifying the duty structure for the textile industry, notified under Notification No. 14/2002-C.E., which was issued as a part of the Budget 2002-03. 3. In view of the foregoing, we are of the view that the Commissioner has misdirected herself to apply the higher rate of duty in the case of the appellants, whereas the concessional rate under Notification No. 14/2002-C.E. has been allowed in respect of other units similarly situated. We, therefore, set aside the impugned order with consequential relief to the appellants. 13. Further Tribunal has examined the issue in the case of Shri Shahu Chatrapati Mills in Appeal no. E/2464/2004 wherein vide O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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