Textile exemption deeming fiction given full effect; composite mills may claim concessional benefit without documentary proof.

The textile exemption scheme under Notification No. 14/2002-CE was interpreted in line with the Supreme Court's ruling in Sports & Leisure Apparels Ltd., which gave full effect to the notification's deeming fiction. Fibres and yarns were treated as duty paid even without documentary proof, so exemption could not be denied merely for want of such proof. Composite mills satisfying the scheme's conditions were therefore entitled to the concessional benefit, and denial of exemption on that ground was unsustainable.

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Issues: Whether the appellant was entitled to the benefit of Notification No. 14/2002-CE dated 01.03.2002 for the relevant clearances from the composite mill.

Analysis: The issue was governed by the interpretation placed on the textile exemption scheme by the Supreme Court in Sports & Leisure Apparels Ltd., which held that the deeming provision in the notification had to be given full effect. The legal fiction that fibres and yarns are deemed to have been duty paid, even without documentary proof, meant that the benefit of the notification could not be denied merely for want of such proof. The controlling consideration was whether the conditions of the exemption scheme were satisfied, and the precedent made it clear that composite mills falling within the scheme were entitled to the concessional benefit.

Conclusion: The appellant was entitled to the benefit of Notification No. 14/2002-CE, and the denial of exemption was unsustainable.

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