Custom, Excise & Service Tax Tribunal
K.G.Denim Ltd vs Commissioner Of Central Excise, Salem on 2 March, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos.E/1044 & 1045/04
[Arising out of Order-in-Appeal No.220 & 221/2004-CE [SLM] dt. 23.4.2004 passed by the Commissioner of Central Excise (Appeals), Salem]
For approval and signature:
Honble Ms. JYOTI BALASUNDARAM, Vice-President
Honble Dr. CHITTARANJAN SATAPATHY, Technical Member
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? :
3. Whether the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
K.G.Denim Ltd.
Appellant/s
Versus
Commissioner of Central Excise, Salem
Respondent/s
Appearance :
Shri S.D.Sankaran, Consultant Shri C.Dhanasekaran, SDR For the Appellant/s For the Respondent/s CORAM:
Honble Ms. Jyoti Balasundaram, Vice-President Honble Dr. Chittaranjan Satapathy, Technical Member Date of hearing : 2.3.2011 Date of decision : 2.3.2011 Final Order No.____________ Per Jyoti Balasundaram The issue involved in both the above appeals being common, they are taken up together for decision.
2. The appellants herein are a 100% EOU holding Customs Bonded Warehouse Licence for the manufacture of denim fabrics classifiable under CTH 5209.42 and they were permitted to remove specific quantities of denim fabrics to the Domestic Tariff Area (DTA) on payment of appropriate duty of excise. The department was of the view that in respect of ECRU fabrics and fents and rags to DTA, the assessees had adopted incorrect rate of basic customs duty for computing the duty of excise and hence show cause notice dt. 26.12.2000 for recovery of duty of Rs.1,98,402/- for the period 1st January 2000 to 30th June 2000 and for imposition of penalty, and SCN dt. 7.8.2001 for recovery of duty of Rs.19,298/- for the months of July and August 2000 and for imposition of penalty, were issued. Out of the demand of duty of Rs.1,98,402/-, demand of Rs.1,86,815/- was confirmed and the demand raised in the second notice dt. 7.8.2001 was confirmed and penalty of Rs.10,000/- each was imposed. The Commissioner (Appeals) upheld the duty but set aside the penalty ; hence these appeals before the Tribunal.
3. We have heard both sides. Fents are cut pieces of cloth arising during the course of manufacture of fabrics and rags are waste cloth which are left after a garment has been cut out. The quality fabrics in running length cannot be equated with fents and rags which are normally marketed as per weight and not according to their length since the width of the goods varies. In the case of Commissioner of Central Excise Vs Ambika Silk Mills [1990 (45) ELT 620], the Tribunal has held that the value of cut pieces or sub-standard goods has to be lower than the value of standard goods. Notification No.2/95-CE dt. 4.1.95 reduces the effective rate of duty from 30% ad valorem or Rs.30 per Sq. mtr whichever is higher to 15% ad valorem or Rs.15 per sq. mtr whichever is higher. The assessees adopted the rate of basic customs duty as 17.5% which, they submit, is higher than Rs.15 per sq.mtr. Applying the ratio of the decision in the case of Ambika Silk Mills cited supra, we hold that the assessees are not liable to pay differential duty, set aside the impugned order and allow the appeals.
(Operative part of the order was
pronounced in open court on 2.3.2011)
(Dr. CHITTARANJAN SATAPATHY) (JYOTI BALASUNDARAM)
TECHNICAL MEMBER VICE-PRESIDENT
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