Custom, Excise & Service Tax Tribunal
Ludhiana vs M/S Arihant Industries Ltd on 22 January, 2015
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066 CIRCUIT BENCH AT CHANDIGARH Appeal No.E/2520/2006-EX(DB) [Arising out of OIA No.280/CE/Chd/06, dt.31.03.2006, passed by Commissioner of Central Excise & Customs (Appeals), Chandigarh] Commissioner, Central Excise & Service Tax, Ludhiana Appellant Vs M/s Arihant Industries Ltd. Respondent
Represented by:
For Appellant: Shri V.P. Batra, Authorised Representative For Respondent: None For approval and signature:
Mr. P.K. Das, Honble Member (Judicial) Mr. P.S. Pruthi, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No 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 their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
MR. P.K. DAS, HONBLE MEMBER (JUDICIAL) MR. P.S. PRUTHI, HONBLE MEMBER (TECHNICAL) Date of Hearing/Decision:22.01.2015 Final Order No.50985/2015 Per: P.K. Das
1. None appears on behalf of the Respondents. There is no application for adjournment.
2. After hearing the ld.Authorised Representative for the Revenue and on perusal of the records, we find that the Respondents are engaged in the manufacture of Man Made Processed Knitted Fabrics, classifiable under sub-heading No.6002.93 of the Schedule to the Central Excise Tariff Act, 1985. They claimed the concessional rate of duty in terms of Notification No.14/2002-CE, dt.01.03.2002, for the period September 2002 to March 2003.
3. We find that during the said period, the Respondents cleared the Processed Man Made Woven Fabrics by availing concessional rate of duty in terms of Notification No.14/2002-CE, dt.01.03.2002 as amended.
4. The Respondent claimed the concessional rate of duty under Sr.No.16 (Processed Man Made Knitted Fabrics) of the Table appended to the said notification subject to fulfillment of condition No.5 of the said notification. Condition No.5 of the said notification provides if made from textile fabrics, whether or not processed, on which the appropriate duty of excise or customs as the case may be, duty has been paid. According to the Revenue, the Appellants had not fulfilled the Condition No.5 on the unprocessed fabrics out of which the goods manufactured were exempted from payment of duty in terms of Sr.No.1 of the Table of the said notification and therefore, no duty was paid on input.
5. We find that Explanation-II of the said notification provides for the purpose of condition specified in the said notification, textile yarn or fabrics shall be deemed to have duty paid even without production of documents evidencing payment of duty thereon. The larger bench of the Tribunal in the case of Arvind Products Ltd. vs.CCE & ST, Ahmedabad-2014 (310) 515 (Tri.-Del.) in the context of Explanation-II of notification No.14/2002-Ce grey fabrics purchased from the market may be deemed to be duty paid eligible to exemption under Sr.No.16 of the said notification when processed. Reference was answered in favour of the assessee and against the Revenue. Relevant portion of the said decision is produced below:
8.7?In the case of GOI v. Indian Tobacco Association [2005 (187) E.L.T. 162 (S.C.)] also Honble Apex Court held that an exemption notification must be construed with regard to the object and purport it seeks to achieve. It was also laid in this judgment that an expression used in a statute should be given its ordinary meaning unless that meaning leads to anomalous or absurd situation. If the interpretation meant by the Revenue is accepted then every alternate stage of processing will be required to be taxed by virtue of Section 2(f) (ii) of the Central Excise Act, 1944 read with Chapter note 4 of Chapter 52 or Chapter 54 or Chapter 55 of the Central Excise Tariff Act, 1985. This will be an anomalous or absurd situation or else textile processors will be forced to avail Cenvat credit route alone to avoid cascading effect of taxation. In this context Explanatory Note of Budget Bulletin 2002 become relevant when it conveys that benefit of Notification No. 14/2002-C.E., should be available if no credit is taken by the manufacture. For such interpretation Explanation-II to Notification No. 14/2002-C.E., creating fiction of Deemed duty paid, becomes relevant and has to be harmoniously read with the conditions prescribed under Notification No. 14/2002-C.E. It is also a well accepted judicial discipline that if two interpretations of a statute are possible then the one more favourable to the tax payer should be taken.
9.?In view of the above observations we hold that decisions taken in the case of CCE, Ludhiana v. Prem Industries (supra), Simplex Mills Co. Limited v. CCE (supra) and Morarjee Gokuldas Spg. & Wvg. Co. Limited v. CCE (supra) were correct interpretation of exemption Notification No. 14/2002-C.E., dated 1-3-2002, Accordingly, benefit of Sr. No. 12 of Notification No. 14/2002-C.E., will be admissible to the appellants by considering the fabric received for processing as deemed duty paid as per Explanation-II of Notification No. 14/2002-C.E. Any other interpretation will make this explanation redundant. Further such a deemed fiction was not existing before the Honble Supreme Court while delivering judgment in the case of CCE v. Dhiren Chemicals Limited (supra).
6. Learned Authorized Representative for the Revenue submits that in the present case, the appellant claimed benefit for the finished goods under Sr.No.16, We find that in all the cases, the assessees received unprocessed received textile fabrics for the processing, so, the appeals before us are covered by the decision of he larger bench of the Tribunal in the case of Arvind Products Ltd. (supra).
7. In view of that, we find that the impugned orders are not sustainable. Accordingly the impugned orders are set aside and appeals are allowed with consequential relief.
(Dictated & Pronounced in Court) (P.S. Pruthi) (P.K. Das) Member (Technical) Member (Judicial) cbb 4