2016 (3) TMI 564 - AT - Central Excise

Tribunal favors Appellant on duty exemption for Polyester Oriented Yarn (POY)

The Tribunal ruled in favor of the Appellant, holding that Polyester Oriented Yarn (POY) qualified for duty exemption under relevant notifications. The ... Benefit of exemption under Notification No.12/2012-CE, dt.17.03.2012 as amended on POY and Notification No.89/95-CE, dt.18.05.1995 on Waste and Scrap of POY and PSF denied - Held that:- We find from the report that PFY covers UDF (Undrawn Yarn), POY (Partially Oriented Yarn), or FDY (Fully Drawn Yarn), depending upon the winder speed and heat setting methods. In our considered view, the PFY as mentioned in the exemption notification, would also cover the POY as per the report of DSIR. So, we agree with the earlier order dt.20.05.2015. Regarding the demand of duty on waste of PSF and POY, the Tribunal already remanded this matter for examination of this issue in the light of exemption Notification No.89/1995-CE, dt.18.05.1995. On a query from the Bench, the learned Advocate submits that in earlier case, the de-novo adjudication is still pending. So, it is appropriate that in the present appeal, this issue should be remanded to the Adjudicating authority. The demand of duty alongwith interest on POY is set aside. The penalties are set aside. The Adjudicating authority is directed to examine the demand of duty on waste of POY and PSF in the light of the earlier Tribunal order. Needless to say that the Adjudicating authority shall give proper opportunity of hearing before passing the order. The appeal filed by the appellant is disposed of in the above terms. Early hearing application is dismissed on infructuous. Issues:1. Classification of goods under Central Excise Tariff Act, 1985.2. Exemption under Notification No.12/2012-CE and Notification No.89/95-CE.3. Chargeability of duty on waste and scrap in the manufacture of PSF and POY.4. Imposition of penalties.Classification of Goods:The judgment involved a case where the Appellant was engaged in manufacturing Polyester Staple Fibre (PSF) and Polyester Oriented Yarn (POY) classified under specific sub-headings. The Adjudicating authority imposed duty, interest, and penalties on the Appellant, denying exemption under relevant notifications. The Tribunal examined previous orders and held that PSF was exempted, but there was a dispute regarding the classification of POY and waste products. The Tribunal referred to relevant case law and expert reports to determine that POY fell under the exemption notification, aligning with the earlier order.Exemption under Notifications:The Tribunal analyzed Notification No.12/2012-CE and Notification No.89/95-CE to determine the applicability of duty exemptions on PSF, POY, and their waste products. It was observed that PSF and POY manufactured from plastic waste were exempted from duty retrospectively. The Tribunal emphasized the need for a detailed examination of the exemption availability for waste and scrap under Notification No.89/95-CE. The Adjudicating authority was directed to reconsider this aspect and provide a fair opportunity for hearing before making a decision.Chargeability of Duty on Waste and Scrap:Regarding the chargeability of duty on waste and scrap in the manufacture of PSF and POY, the Tribunal referred to the earlier order where this issue was remanded for further examination. The Appellant highlighted that de-novo adjudication was pending in a previous case, indicating the need for a similar remand in the present appeal. Consequently, the Tribunal set aside the demand of duty on waste of POY, emphasizing the importance of a thorough review by the Adjudicating authority in light of previous Tribunal orders.Imposition of Penalties:In terms of penalties, the Tribunal concluded that no penalties were warranted as the appeals filed by the Appellants were allowed on merit. The decision to set aside penalties was based on the allowance of the appeals. The Adjudicating authority was directed to reexamine the demand of duty on waste of POY and PSF in accordance with previous Tribunal directives, ensuring a fair hearing process. The appeal was disposed of with specific instructions for the Adjudicating authority, emphasizing the importance of proper consideration and opportunity for the Appellant.---