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of <h1>Tribunal affirms Commissioner's decision on duty payment interpretation, allowing fabric stage duty payment & credit reversal.</h1> The Tribunal upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal regarding the interpretation of Notification No. 14/2002 on duty ... Benefit of exemption under Sl. No. 1 of Notification No. 14/2002-C.E. available. Issues:- Interpretation of Notification No. 14/2002 regarding payment of duty on yarn at spindle stage.- Validity of Trade Notice No. 40/96 in relation to Central Excise Rules, 2002.- Compliance with conditions for availing full exemption under Notification No. 14/2002.- Applicability of Tribunal and High Court decisions in similar circumstances.Interpretation of Notification No. 14/2002:The case involved a dispute where the respondents opted for exemption under Sr. No. 1 of Notification No. 14/2002 for woven fabrics made from textile yarn. The issue arose as the respondents were unable to ascertain the variety and quantity of yarn at the spindle stage, leading them to pay duty on yarn at the fabric stage. The Revenue contended that this contravened the Notification, demanding differential duty for the period in question. The Commissioner (Appeals) relied on Trade Notice No. 40/96, allowing duty payment at the fabric stage. The Revenue challenged this decision.Validity of Trade Notice No. 40/96:The Revenue argued that Trade Notice No. 40/96 was not applicable under Central Excise Rules, 2002, as it lacked a corresponding provision to the erstwhile Rule 49A. They contended that the respondents' availing of Cenvat credit on inputs contradicted the conditions for full exemption under the Notification. The respondents, however, defended their position, citing Rule 32 and Rule 33, validating trade notices, and previous Tribunal decisions supporting duty payment at the fabric stage.Compliance with Exemption Conditions:The respondents maintained that paying duty at the fabric stage and reversing credit was permissible under Trade Notice No. 40/96, supported by Tribunal and High Court decisions in similar cases. They argued that the duty paid on yarn exceeded the duty payable on grey fabric, resulting in no loss of duty. The Tribunal found the difficulty in paying duty at the spindle stage justified the fabric stage payment, and the reversal of credit did not amount to availing credit, aligning with the Allahabad High Court decision.Applicability of Previous Decisions:The Tribunal upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal. It considered the difficulty in spindle stage duty payment, the validity of Trade Notice No. 40/96, and the alignment with previous Tribunal and High Court decisions. The Tribunal found no fault in the fabric stage duty payment and credit reversal, emphasizing the practical challenges faced by the respondents in complying with the Notification's requirements.
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