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of <h1>Textile company wins appeal on benefits denial & modvat credit restriction under Notification No. 5/99</h1> <h3>M/s. Salem Textiles Ltd. Versus CCE, Salem</h3> M/s. Salem Textiles Ltd. Versus CCE, Salem - 2016 (332) E.L.T. 135 (Tri. - Chennai) Issues:- Denial of benefits under Notification No. 5/99 (Sl. No. 137 & 130)- Restriction of modvat credit to a certain amountAnalysis:Issue 1: Denial of benefits under Notification No. 5/99 (Sl. No. 137 & 130)The case involved the appellant, a textile company, converting duty paid single yarn into double yarn through a twisting and winding process. The authorities demanded duty payment and imposed a penalty for allegedly clearing the yarn without duty payment. The Ld. Commissioner (Appeals) partially allowed modvat credit but upheld the denial of benefits under Notification No. 5/99. The appellant appealed against the denial of benefits and the restriction of modvat credit. The appellant argued that the twisting and winding process did not create a new product and should be exempt under Notification No. 5/99. The Ld. AR contended that the twisting and doubling amounted to manufacture, making the final product dutiable. The Tribunal examined the process and relevant case laws. The Tribunal found that the twisting and winding process did not result in a new product and, therefore, qualified for the exemption under Notification No. 5/99. The Tribunal cited previous judgments supporting this interpretation and ruled in favor of the appellant, allowing the appeal and setting aside the impugned order.Issue 2: Restriction of modvat creditThe appellant's eligibility for modvat credit was linked to the exemption under Notification No. 5/99. Since the Tribunal ruled in favor of the appellant regarding the exemption, the question of availing modvat credit on inputs did not arise. The Tribunal held that since the appellant qualified for the exemption, the denial of modvat credit was unwarranted. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal based its decision on the interpretation of the twisting and winding process and its alignment with the provisions of Notification No. 5/99.In conclusion, the Tribunal's judgment addressed the denial of benefits under Notification No. 5/99 and the restriction of modvat credit for the appellant. By analyzing the manufacturing process and relevant legal precedents, the Tribunal ruled in favor of the appellant, allowing the appeal and providing relief in line with the exemption under Notification No. 5/99.
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