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of <h1>Appellant wins appeal, grey fabrics classified as intermediate goods under Rule 16(B)</h1> <h3>Sangam Spinners Versus Commissioner of Central Excise</h3> Sangam Spinners Versus Commissioner of Central Excise - TMI Issues:Interpretation of Rule 16(B) regarding treatment of grey fabrics as intermediate goods for duty payment.Analysis:The appellant, engaged in manufacturing yarn from duty paid fibers, cleared the yarn to job workers under Rule 16(B) with proper permission. The Revenue contended that the grey fabrics produced by the appellant should be treated as final excisable goods, leading to a show cause notice and subsequent confirmation of demand, interest, and penalty by the Commissioner.The core issue was whether the grey fabric manufactured by the appellant and sent to job workers should be considered intermediate goods under Rule 16(B). Referring to precedents like M/s. Valentino Syntex Pvt. Ltd. case and Sangam Spinners case, the Tribunal held that grey fabrics produced from duty paid yarn and cleared for further processing can be treated as intermediate goods under Rule 16(B). Therefore, the appeal of the appellant was allowed based on established jurisprudence.Additionally, the appellant argued that since the Commissioner's permission under Rule 16(B) was still valid, the Revenue could not challenge it, citing precedents like Maruti Udyog Ltd. case and CCE vs. TISCO case. The appellant also emphasized that the duty paid on yarn by the job worker was available as credit for the appellant, ensuring a revenue-neutral position as the duty paid on grey fabrics by the appellant was offset by the duty credit available. This argument further supported the Tribunal's decision to set aside the impugned orders and allow the appeal with consequential relief to the appellant.In conclusion, the Tribunal's analysis focused on the interpretation of Rule 16(B) in treating grey fabrics as intermediate goods, supported by legal precedents and arguments regarding the validity of Commissioner's permission and revenue neutrality, resulting in the favorable outcome for the appellant.
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