2024 (3) TMI 553 - AT - Central Excise

Manufacturer loses concessional excise duty claim for using textile yarn waste outside notification scope

The CESTAT New Delhi dismissed the appeal where the appellant failed to establish entitlement to concessional excise duty under N/N. 08/2014-CE dated ... Dropping of Extended period of limitation - restriction of demand of excise duty for the normal period - compliance with the conditions specified in the exemption N/N. 08/2014-CE dated 11.07.2014 so as to be entitle to the benefit of the concessional rate of duty prescribed therein. N/N. 08/2014-CE dated 11.07.2014 inserted Entry no.70A or not - Polyester Staple Fibre or Polyester Filament Yarn manufactured from Plastic Scrap or Plastic Waste including waste Polyethylene Terephthalate (PET) bottles - Time Limitation - Penalty - interest - HELD THAT:- As per the allegations made in the show cause notice and as admitted by Shri Suresh Kawar Jain, Managing Director of the appellant in his statement dated 14.12.2017, it is correct that the appellant had been using textile yarn waste to manufacture ‘Popcorn’, which is manufactured from different types of waste including yarn waste and is a recycled product. The notification specifically provides for plastic scrap or plastic waste including waste Polyethylene Terephthalate bottles and even the minimum quantity of textile yarn used by the appellant cannot be included in the specification under the notification. The Adjudicating Authority is right in observing that the moment any other waste or primary material is used which does not fall in the description of the plastic scrap/plastic waste/PET bottles, the assessee goes out of the purview of the said notification. Considering the principle of law that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession, the appellant has failed to substantiate the same. Also, if exemption is available on complying with certain conditions, the said conditions have to be complied with and as per the discussion above, it cannot be said that the appellant has complied with the mandatory conditions of the notification - the contention of the learned Counsel that the terms ‘plastic waste’ in the notification is not specific but is of general nature is rejected. The wordings of the condition provided in the notification are absolutely clear and unambiguous and leaves no manner of doubt. Time Limitation - Penalty - HELD THAT:- The Adjudicating Authority had confirmed the demand only to the normal period as there was no suppression of facts or mis-statement on the part of the appellant and consequently, the mandatory penalty under Section 11 AC(1)(c) of the Act was held to be not leviable. Interest - HELD THAT:- The liability to pay interest under Section 11AA of the Act on the central excise duty amounting to Rs.1,67,20,988/- being mandatory and automatic by operation of law is upheld. There are no strong and compelling reasons to differ from the impugned order, which deserves to be upheld - appeal dismissed. Issues involved:Challenge to Order-in-Original regarding excise duty demand for normal and extended periods.Details of the Judgment:The appellant, engaged in manufacturing Polyester Stample Fibre (PSF) and Nylon Staple Fibre (NSF), was alleged to have wrongly availed benefits under Notification No.08/2014-CE. The investigation led to a show cause notice for demanding excise duty. The Adjudicating Authority restricted the demand for the normal period but dropped it for the extended period, leading to the appellant's appeal against the confirmed demand of central excise duty.The appellant argued that yarn waste from the textile industry qualifies as plastic waste under the notification due to containing Polyethylene Terephthalate, crucial for various products. The appellant's contention was that 'Popcorn', a by-product, is used in manufacturing PSF. However, the Revenue representative cited legal precedents to emphasize strict compliance with notification conditions, denying the appellant's eligibility for concessional rates.The Tribunal analyzed the notification's language, emphasizing strict interpretation and adherence to specified conditions. It was found that the appellant's use of textile waste to manufacture 'Popcorn' did not align with the notification's requirements. Even a minimal amount of textile waste usage made the appellant ineligible for the concessional rate of duty, as per the notification's clear and unambiguous terms.Regarding the limitation period, the Adjudicating Authority confirmed the demand only for the normal period due to no suppression of facts. The penalty was imposed for contravention of the Act, and the interest on the excise duty was upheld as mandatory. The Tribunal upheld the impugned order, dismissing the appeal on 12th March, 2024.