Section 11C non-levy notification barred excise demand on cotton yarn sent for further processing and export.

Notification No. 21/2005-C.E. (N.T.) under section 11C recognised a generally prevalent practice of non-levy on cotton yarn removed from one factory to another for further processing during the specified period. On that basis, the duty earlier not levied was not required to be paid, subject to statutory accounting and disposal requirements. The Tribunal found the assessee's clearances covered by the notification and noted that the goods were sent for further processing and exported. The excise demand was therefore unsustainable, the confirming orders were set aside, and consequential relief followed.

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Issues: Whether duty of excise was demandable on cotton yarn removed from one factory to another for further processing during the relevant period in view of Notification No. 21/2005-C.E. (N.T.) issued under section 11C of the Central Excise Act, 1944, and whether the impugned demand could survive.

Analysis: The notification recorded that a practice of non-levy had been generally prevalent in respect of cotton yarn falling under Chapter 52 removed from one factory to another for further processing during the specified period. It further directed, in exercise of section 11C, that the duty which was not being levied according to that practice during the relevant period would not be required to be paid, subject to accounting and disposal in accordance with Central Excise law. The Tribunal accepted that the appellants' clearances fell within the scope of the notification and also noted that the goods were sent for further processing and exported, reinforcing the assessees' stand.

Conclusion: Duty was not demandable and the impugned demand could not be sustained.

Final Conclusion: The orders confirming duty were set aside and the appeals succeeded with consequential relief.

Ratio Decidendi: Where a statutory notification issued under section 11C recognises a prevalent non-levy practice for a specified period and directs that the duty so not levied shall not be recovered, a demand contrary to that notification is unsustainable.

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