Custom, Excise & Service Tax Tribunal
M/S. Gujarat Heavy Chemicals Ltd vs Cce, Madurai on 21 May, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No. E/296/2009
(Arising out of Order-in-Appeal No. 49/2009 (CE) dated 25.2.2009 passed by the Commissioner of Central Excise (Appeals), Madurai)
M/s. Gujarat Heavy Chemicals Ltd. Appellants
Vs.
CCE, Madurai Respondent
Appearance Shri M.N. Bharathi, Advocate for the Appellants Shri C. Dhanasekaran, SDR for the Respondent CORAM Honble Dr. Chittaranjan Satapathy, Technical Member Date of Hearing: 21.05.2010 Date of Decision: 21.05.2010 Final Order No. ____________ Heard both sides. The appellants manufactured the impugned cotton yarn in their Manaparai unit and the same on payment of duty was sent to their Paravai unit. They took credit of the duty paid on such yarn in their Paravai unit. Subsequently, the impugned yarn was cleared without payment of duty under CT-1 certificate obtained by Loyal Textiles and Mills and the latter converted the said yarn into fabrics and ultimately exported. The Department is not questioning the fact of export. The only question raised in this case is that the Paravai unit cleared the yarn without undertaking any manufacturing process. Hence, the duty equivalent to the credit taken has been demanded and an equal amount of penalty has been imposed apart from levying interest.
2. After hearing both sides and on perusal of the case records, I find that no questions have been raised by the Department regarding the eligibility of M/s. Loyal Textiles and Mills to procure the impugned yarn without payment of duty, process it and subsequently export the same. As regards the Paravai unit, the CENVAT credit rules allows a manufacturer to clear duty paid inputs in respect of which credit has been taken either for home consumption on reversal of the credit or for export or export processing without payment of duty. In the instant case yarn obtained on payment of duty has been sent for export processes without payment of duty as permitted under Notification No. 43/2001. Hence the activity undertaken by the appellants appear to be within the four corners of law so long as ultimate export is not questioned. As such, the impugned orders are set aside and the appeal is allowed with consequential benefit to the appellants. (Dictated and pronounced in open court) (Dr. Chittaranjan Satapathy) Technical Member Rex ??
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