Customs, Excise and Gold Tribunal - Mumbai
Suryalakshmi Cotton Textile Mills Ltd. vs Commissioner Of Customs And Central ... on 19 April, 2004
Equivalent citations: 2004(177)ELT492(TRI-MUMBAI)
ORDER Moheb Ali M., Member (T)
1. The stay application arose out of the order of Commissioner of Central Excise Nagpur. In the impugned order he demanded differential duty of Rs. 4,90,51,770/- (BED + AED) under Section 11A and imposed a penalty of Rs. 30,00,000/-(Thirty lakhs under Rule 25 of Central Excise Rules 2002.
2. Briefly the facts are that the applicant is a manufacturer of cotton yam, Denim fabrics containing 85% or more by weight of cotton and Denim fabrics less than 85% by weight of cotton mixed with MMF. A part of the cotton yarn made by the applicant was cleared on payment of duty and the other was captively consumed in the manufacture of Denim fabrics of both types mentioned above. Such fabrics were cleared on payment of duty (8% BED + 4% AED) by availing of the benefit of Notification No. 14/2002 CE dt. 1.3.2002. This rate of duty is applicable under the said notification subject to condition 2 and 5 of the notification. The dispute pertains to the meaning of expression "appropriate duty........ has been paid" occurring in the conditions 2 and 5 The Commissioner in the impugned order held that the applicant has not discharged appropriate duty on captively consumed yarn in as much as he has availed of the benefit of Notification No. 22/96 on and so has to pay 16% Adv. BED + 8% AED on the final product, i.e. Denim fabrics. The applicant discharged duty only at the rate of 8% BED and 4% AED on the final product availing the benefit of Notification No. 14/2002. The Commissioner demanded the differential duty in the impugned order.
3. Heard both sides.
4. The Ld. Advocate for the applicant argued that in exactly same circumstances Commissioner of Central Excise (Appeals) Nagpur allowed the benefit of Notification No. 14/2002 whereas in the present case Commissioner Nagpur denied the benefit. Divergent views exist on the meaning and purpose of Board's Circular No. 667/52/2002CX dt. 26.9.2002 and its clarificatory Circular No. 680/7/2002 CX dt. 10.12.2002. The plea is that the clarificatory circular clearly brings out that an assessee is entitled to the benefit of Notification No. 14/2002 even when duty is not discharged on the input such as yarn in this case, when it is captively consumed.
5. Ld. Jt. CDR argued that the circular above cited do not advance the cause of the applicant. He argued that the applicant procures cotton fibre from open market as well as yarn and uses them in the manufacture of Denim. This final product is not entitled to the benefit of Notification No. 14/2002 as no appropriate duty was paid on the fibre or yarn used in the manufacture of Denim fabrics.
6. We examined the rival contentions. The Commissioner in the impugned order has taken diametrically opposite view to that of the one taken by the Commissioner (A) Nagpur in his order dated 26.2.04 while interpreting the same circular and the same notification referred to above. The issue therefore is one of interpretation of Notification No. 14/2002 and the circulars. Prima facie there are divergent views on the issues even amongst the Departmental officers.
7. The stay application is allowed unconditionally.
(Pronounced in Court)