Customs, Excise and Gold Tribunal - Mumbai
Bombay Dyeing And Manufacturing Co. ... vs Commissioner Of Central Excise on 29 April, 2005
Equivalent citations: 2006(197)ELT108(TRI-MUMBAI)
ORDER
Jyoti Balasundaram, Vice President
1. The above appeals arise out of two separate orders, one passed by the Commissioner, Central Excise by which demand of duty of Rs. 1,11,48,401/- has been confirmed and penalty of Rs. 10 lakhs imposed upon the assessee (subject matter of Appeal No. 2650/04) and the other order passed by the Commissioner (Appeals) upholding the confirmation of demand of Rs. 33,03,450/- and imposition of a penalty of equivalent amount, by the Asst. Commissioner of Central Excise (subject matter of Appeal No. 2585/04).
2. The appellants herein are engaged in the manufacture of yarn, labrics etc. falling under Chapter 52 & 55 of the Schedule to the CETA 1985. For the manufacture of the yarn and fabrics etc. they have a factory in Elphinstone Road at Mumbai. They have another mill known as Spring Mill wherein grey fabrics are manufactured out of yarn spun therein. During the period 3.9.96 to 2.6.98, Notification No. 29/96-CE dated 3.9.96 extended deemed credit to grey fabrics at the time of payment of duty on processed fabrics. In that Notification Composite Mill was defined in Explanation I as "Composite Mill" means "a manufacturer, who is engaged in the processing of fabrics with the aid of power along with spinning of yarn from libers and weaving or knitting or crocheting of fabrics within the same factory." During this period, by virtue of Notifications No. 8/96 CE dated 23.7.96 and 4/97 dated 1.3.97, grey fabrics were exempted from payment of duty. On 2.6.98 Notification No. 29/96-CE was amended so as to change the definition of composite mill. As per the amendment "Composite Mill" means "a manufacturer who is engaged ........within the same factory and includes a Multi Locational Composite Mill i.e. a public limited company which is engaged in the processing of fabrics with the aid of power along with.............. in one or more factories owned by the same public Ltd. company." During this period, by virtue of Notifications Nos. 5/98-CE dated 2.6.98 and 5/99-CE dated 28.2.99 as well as 3/01-CE dated 1.3.01, grey fabrics manufactured by a multi locational composite mill were chargeable to duty, and hence deemed credit was not admissible.
3. Notification No. 6/2002-CE dated 1/3/2002 was issued so as to provide for deemed credit of duty on certain declared inputs used in the manufacture of certain final products at different rates, manufactured by a composite mill and manufactured by a manufacturer other than composite mill. Clause 5 to Notification provided that "in respect of composite mill the provisions of this Notification shall apply only to processed fabrics manufactured from unprocessed fabrics not woven in the same composite mill...................". The department was of the view that the benefit of deemed credit under this Notification was not available to the appellants herein by virtue of the fact that the grey fabrics have been manufactured in the same Multi Locational Composite Mill and therefore the processed fabrics would not get the benefit of deemed credit, although under Notification 14/02 dt. 1/3/02 the above was available to composite mill who cleared grey fabrics without payment of duty. Show Cause Notice dated 25.3.2003 proposing to denial of benefit of deemed credit at the rate of 26% of the duty payable on processed fabrics of cotton, was issued. Notice proposed recovery of duty of Rs. 33,03,450/-, proposed disallowance of deemed credit of above amount and imposition of penalty. This notice was adjudicated by the Asst. Commissioner who confirmed the demand, by disallowing the modvat credit, together with interest and imposed penalty of equivalent amount. This order was challenged by the assessee before the Commissioner (Appeals) who vide his order dated 31.5.2004 upheld the adjudication order of the Asst. Commissioner and rejected the appeal. This impugned order is the subject matter of challenge in Appeal No. E/2585/04.
4. The order dated 3.8.2004 of the Commissioner of Central Excise which has been appealed against (Appeal No. 2550/04) disposes of two Show Cause Notices, one dated 30.6.2003 and the other dated 16.01.2004, wherein the demands of duty raised therein have been confirmed and penalties imposed.
5. We have heard both sides.
6. There is no dispute that the definition of composite mill included Multi Locational Composite Mill during the period in dispute. The argument of Ld. Counsel that the expression "same composite mill" mentioned in para 5 of Notification 6/2002 should be interpreted so as to mean 'same factory,' as otherwise the Notification would be rendered redundant and otiose, for the reason that Multi Locational Composite Mill would never get the benefit of the notification, cannot be accepted in the face of the clear language of para 5 and in the face of the admitted position regarding unchanged definition of "composite mill" during the entire period and further for the reason that Notification covers independent processors as well as composite mills, and therefore benefit under Notification will be available for some categories of persons i.e. independent processors. We, therefore, hold that the benefit of Notification No. 6/2002 is not admissible to the appellants.
7. However, the alternative plea that since duty has been paid on yarn contained in the grey fabrics, the assessees are eligible to actual Cenvat credit under Rule 2(1) B of the Cenvat Credit Rules 2002 has force. There is no dispute about the amount of deemed credit. There is no dispute that the deemed credit taken by the appellant is less than the actual duty paid on the yarn contained in the grey fabrics. The actual quantity of duty of yarn contained is reflected in the Central Excise invoices issued by the spinning units to textile mills. Therefore the plea of the appellants that they are entitled to actual credit is required to be accepted.
8. We order accordingly.
9. In view of the above, we hold that the appellants are entitled to actual credit, set aside the demand and penalties and allow the appeals.
(Dictated in Court)