Deemed duty-paid inputs under Excise exemption: Tribunal upheld denial of relief for processed man-made fabrics.

Explanation II to Notification No. 14/2002-C.E. treats textile yarn or fabrics as duty paid even without duty-paying documents, and the Tribunal followed the larger Bench view that this deemed-paid treatment can extend to processed man-made fabrics received from the market. On that construction, exemption under Sr. No. 16, read with Condition No. 5, could not be denied merely because duty was not shown to have been paid on the unprocessed fabrics. The Tribunal reasoned that a contrary interpretation would make the explanation redundant. The exemption claim was therefore rejected on the facts considered, and the orders granting relief were set aside in favour of the Revenue.

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Issues: Whether the assessee was entitled to concessional excise duty under Notification No. 14/2002-C.E. for processed man-made fabrics by treating the inputs as deemed duty paid under Explanation-II.

Analysis: The concession under Sr. No. 16 of Notification No. 14/2002-C.E. was subject to Condition No. 5, but Explanation-II expressly deems textile yarn or fabrics to have suffered duty even without production of duty-paying documents. The Tribunal followed the larger bench view that, for processed fabrics received from the market, the input could be treated as deemed duty paid and the exemption could not be denied on the ground that no duty was paid on the unprocessed fabrics. It held that a contrary reading would render the explanation redundant and was not sustainable in light of the settled interpretation of the notification.

Conclusion: The exemption claim was not sustainable on the facts as considered, and the orders denying relief were set aside in favour of the Revenue.

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