Custom, Excise & Service Tax Tribunal
) Commissioner Of Central Excise, ... vs ) Srf Ltd on 22 April, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos.E/117/06 (by dept.)
E/82/07 (by assessee)
[Arising out of Order-in-Original No.4/2005 dated 18.5.2005 and O-I-A No.90/2006 dated 20.12.2006 passed by the Commissioner of Central Excise, Tiruchirapalli and
CC & CCE (Appeals), Trichy respectively]
For approval and signature:
Honble Ms.JYOTI BALASUNDARAM, Vice-President
Honble Mr. P.KARTHIKEYAN, Member (Technical)
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? :
1) Commissioner of Central Excise, Trichy
2) SRF Ltd.
Appellant/s
Versus
1) SRF Ltd.
2) Commissioner of Central Excise, Trichy
Respondent/s
Appearance :
Shri K.S.Venkatagiri, Advocate Shri V.V.Hariharan, JCDR For the Assessee/s For the Revenue CORAM:
Honble Ms.Jyoti Balasundaram, Vice-President Honble Mr. P. Karthikeyan, Member (Technical) Date of hearing : 22.4.2009 Date of decision : 22.4.2009 Final Order No.____________ Per Jyoti Balasundaram M/s.SRF Ltd. are manufacturers, inter alia, of rubberized textile fabric, dipped tyre cord fabrics and tarpaulins out of unprocessed fabrics of man-made fabric yarn (classified by them under CET SH 5911.90), an intermediate product captively consumed. They purchase/import nylon/polyester filament yarn which is first twisted and then woven to produce grey (unprocessed nylon/polyester fabric) and then captively consumed in the manufacture of the final products. The department was of the view that the intermediate product woven from nylon/polyester filament yarn fell for classification under chapter 54.06 and that the assessees had wrongly availed exemption under Notification No.67/95-CE dt. 16.3.95 (captive consumption notification) for the reason that none of the final products cleared by them were leviable to Additional Excise Duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and the benefit of the Notification was available only if the final products were not exempt from the whole of duty of excise or additional duty of excise leviable thereon. The department also noticed that assessees had manufactured and cleared rubberized belting fabrics to M/s.Oriental Rubber Industries Ltd., Pune on job work during the period 2002-03 without payment of duty. Hence a show-cause notice dt. 3.9.2004 proposing reclassification of the unprocessed/grey fabrics of nylon/polyester filament yarn under CET SH 5406.10 as woven fabrics of synthetic filament yarn, proposing recovery of duty of Rs.4,37,61,811/- on grey fabrics captively consumed during the period 1.8.03 to 30.6.04, proposing recovery of interest under Section 11AB and imposition of penalty under Rule 25 of Central Excise Rules, 2002 was issued to SRF. The notice was adjudicated by the Commissioner who held as under :-
1) Fabrics of Synthetic Filament yarn captively consumed by SRF in the manufacture of industrial fabrics may continue to be classified under Sub-heading 5911.90.
2) The above classification will be subject to the outcome of the appeal pending before Supreme Court in the case of Jyoti Overseas Ltd. [2002 (142) ELT A.170 (SC).
3) I hold that SRF is entitled to claim the benefit of Notification 67/95-CE irrespective of classification under 54.06 or 59.11
4) I drop the demand for duty, interest and proposal for imposing penalty as given in the Show Cause Notice.
2) The Revenue is in appeal against the classification of the goods and the extension of the benefit of the captive consumption notification by Commissioner vide his Order-in-Original No.4/2005 dt. 18.5.05. Appeal No.E/117/06 is against the above order of the Commissioner.
3) On 19.12.2005, the Joint Commissioner of Central Excise dropped the demand of duty of Rs.9,45,545/- on unprocessed fabrics of synthetic filament yarn captively consumed by SRF during the period 1.7.04 to 8.7.04 and dropped the demand for interest and proposal for penalty as raised in the show-cause notice dated 13.7.2005 holding that the goods fell for classification under CET SH 5406.10 but were eligible to exemption under Notification No.67/95. The Revenue carried the matter in appeal to the Commissioner (Appeals) who vide his Order-in-Appeal No.90/2006 dt. 20.12.2006 held that the benefit of Notification was not admissible to the assessees and hence allowed the appeal of the Revenue. The assessees have preferred Appeal No.E/82/07 against the denial of benefit of captive consumption.
4) We have heard both sides. The goods in question are eligible to be classified under Chapter 54 in the light of the apex courts decision in CCE Nagpur Vs Simplex Mills Co. Ltd., 2005 (181) ELT 345 (S.C), wherein the apex court has held that the reasoning of the Tribunal in Jyoti Overseas Ltd. Vs Commissioner, 2001 (130) ELT 446 (Tri-LB) classifying grey cotton fabrics cleared in running length under Chapter 52.07 was unexceptional. The Supreme Court held that since grey cotton, belting and duck was in running length not cut to size or processed, and hence were non-made ups, they fell for classification either under Chapter 52 or 54 and not under Chapter 59 which covered only made-ups (in other words, the apex court held that only made-ups fell for classification under Chapter 59). We, therefore, accept the stand of the Revenue on classification. However, the benefit of the captive consumption notification cannot be denied to the goods for the reason that the benefit is available unless the final products manufactured out of such inputs are exempt from the whole of the duty of excise or additional duty of excise leviable thereon or are chargeable to nil rate of duty .. In the present case, the inputs were leviable to basic duty and no additional duty of excise was leviable thereon and, therefore, the inputs cannot be considered as exempt from the whole of additional duty of excise leviable thereon.
5) In the result, Appeal No.E/117/06 is partly allowed by accepting the claim of the Revenue for classification of the goods under Chapter 54 but holding that assessees are eligible to the benefit of Notification No.67/95, and Appeal No.E/82/07 is allowed in toto by holding that the assessees are entitled to the captive consumption notification benefit.
(Operative part of the order was pronounced in open court on 22.4.2009) (P.KARTHIKEYAN) (JYOTI BALASUNDARAM) MEMBER (T) VICE-PRESIDENT gs 1 2