2015 (12) TMI 1096 - AT - Central Excise

Tribunal Upholds Duty-Free Clearance for Appellants

Commissioner, Central Excise & Service Tax, Daman Versus M/s Valson Industries Ltd.

The Tribunal upheld the decision that the Appellants are entitled to clear yarn waste free of duty under Sr.No.8 of Notification No.30/2004-CE, despite ... Denial of exemption claim - yarn waste - whether the Appellant is eligible for duty free clearance of “yarn waste” which is produced during the manufacture of final product, “Polyester Dyed Yarn” - Held that:- Appellants are not eligible for duty exemption for yarn waste, under Notification No.89/95-CE, dt.18.05.1995 as contended by the Revenue. However, this does not preclude the Appellants from availing the benefit of Notification No.30/2004-CE, dt.09.07.2004, which is altogether a separate and independent notification. Not eligible for the benefit of one notification, does not mean that the party is not eligible for the benefit provided under another notification, as far as they fulfill the provisions of the said notification. Therefore, we do not find any irregularity in the clearance of yarn waste free of duty by the Appellant in accordance with Sr.No.8 of the Table of the Notification No.30/2004-CE, dt.09.07.2004. Hence, the Order-in-Appeal setting aside the demand of duty, interest and imposition of penalty is correct - Decided against Revenue. Issues:Eligibility for duty free clearance of 'yarn waste' under different notifications.Analysis:The main issue in this case is whether the Appellant is entitled to duty free clearance of 'yarn waste' generated during the manufacturing process of the final product, 'Polyester Dyed Yarn.' The Appellant has two methods of manufacturing and clearing the final product: one involves availing credit on inputs and paying duty under Notification No.29/2004-CE, while the other does not involve availing CENVAT Credit and claims exemption from duty under Notification No.30/2004-CE. The Appellant segregates the accounts for these two streams of manufacturing. The dispute arises regarding the duty exemption for yarn waste generated during the manufacturing process. Revenue concedes that the Appellants are eligible for exemption under Sr.No.8 of Notification No.30/2004-CE but argues that they are not eligible for duty exemption under Notification No.89/95-CE, resulting in a duty levy on the clearance of such yarn waste.The Commissioner (Appeals) analyzed the situation and found that the waste cleared by the Appellants was obtained during the dyeing process and not during the manufacture of specific goods listed in Sr.No.8 of Notification No.30/2004-CE. The Commissioner concluded that the waste was eligible for exemption under the broader classification of 'All goods' under Heading No.5505. The Commissioner also noted that Notification No.89/95-CE would not apply to the Appellants' case as they manufactured both dutiable and exempted goods, making the duty exemption under Notification No.30/2004-CE applicable. The Commissioner upheld the clearance of waste free of duty under Sr.No.8 of Notification No.30/2004-CE.The Appellate Tribunal found that the Appellants were not eligible for duty exemption under Notification No.89/95-CE, as argued by Revenue. However, this did not prevent the Appellants from availing the benefit of Notification No.30/2004-CE, which was a separate and independent notification. The Tribunal emphasized that being ineligible for one notification did not disqualify the Appellants from benefiting under another, provided they met the criteria of that notification. Therefore, the Tribunal upheld the Order-in-Appeal that set aside the demand for duty, interest, and penalty related to the clearance of yarn waste under Sr.No.8 of Notification No.30/2004-CE.In conclusion, the appeals filed by Revenue were rejected, and the cross objections were disposed of. The Tribunal affirmed that the Appellants were entitled to clear yarn waste free of duty under Sr.No.8 of Notification No.30/2004-CE, despite being ineligible for duty exemption under Notification No.89/95-CE.