Tribunal Upholds Dutiability Decision on Intermediate Cotton Fabrics despite Final Product Exemption

The Tribunal upheld the decision of the Commissioner (A) regarding the dutiability of intermediate products "processed wrap and circular knitted cotton fabrics" despite the final products being exempted under Notification No. 8/2003. The Tribunal ruled that the exemption under Notification No. 67/95 does not apply to intermediary products when the final product is exempt from duty. Consequently, the appeal was rejected, and the impugned order was upheld by the Tribunal on 15-4-2008.

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Issues:
Dutiability of intermediate products under SSI exemption Notification No. 8/2003 and Notification No. 67/95.

Analysis:
The appeal was filed against Orders-in-Appeal passed by the Commissioner of Customs and Central Excise. The appellants manufactured "cotton hosiery undergarments" under the brand name 'Kunnath' and availed SSI exemption under Notification No. 8/2003. However, they were also manufacturing intermediate product "processed wrap and circular knitted cotton fabrics" chargeable to duty. The Original Authority confirmed duty amount, allowed Cenvat credit on raw material consumed, and imposed a penalty. Both parties appealed to the Commissioner (A) who rejected the appeals. The appellants then approached the Tribunal for relief.

The learned JDR argued that since the final products were exempted, the intermediate products would not be entitled to the benefit of Notification No. 67/95, citing relevant legal precedents. The Tribunal carefully reviewed the case records and noted that while the final product was entitled to SSI exemption, the dutiability of the intermediate product was in question. The exemption available to the fabric was withdrawn from 1-4-2003, and the exemption under Notification No. 67/95 would not apply to intermediary products when the final product is exempt or chargeable to nil rate of duty. As the final products were exempted for the first clearances up to a certain value, the exemption under Notification No. 67/95 would not extend to the intermediate products. The Tribunal, in line with the legal position and precedents cited, rejected the appeal and upheld the impugned order.

The judgment was pronounced in open court on 15-4-2008 by the Members of the Tribunal.

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