Exemption for processed fabrics cannot be denied for citing the wrong notification when the applicable exemption still covers the goods.

An assessee was not denied exemption for cotton and man-made fabrics merely because the declarations cited incorrect notifications, where the applicable exemption provision for the relevant period had been amended by Notification No. 83/95 to omit the exclusion relating to bleaching, dyeing or printing. The declarations under Rule 173B and the accompanying price declarations described the goods as received for calendering only, and the record did not establish any other processing. On that basis, the exemption remained available on the correct legal provision and the duty demand could not be sustained.

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Issues: Whether the appellants were entitled to the exemption benefit for cotton fabrics and man-made fabrics during the relevant period, despite having cited incorrect notifications in their declarations, and whether the duty demands could be sustained on the ground that the fabrics were processed by bleaching, dyeing or printing.

Analysis: The relevant period was May 1995 to September 1995. The notifications initially cited had either been rescinded or were not the applicable notifications for the period. The applicable exemption regime stood modified by Notification No. 83/95 dated 24.04.1995, which omitted the condition excluding units having facilities for bleaching, dyeing or printing. The declarations filed under Rule 173B of the Central Excise Rules, 1944 and the accompanying price declarations specifically described the goods as received for calendering only. The record did not establish, either in the show cause notice or in the adjudication order, that the disputed fabrics had undergone processes other than calendering.

Conclusion: The appellants were entitled to the exemption benefit and the duty demands were unsustainable.

Final Conclusion: The adjudication order was set aside and the appeal was allowed.

Ratio Decidendi: An assessee cannot be denied an otherwise admissible exemption merely because an incorrect notification was cited, and where the applicable notification for the relevant period grants relief, the exemption must be applied on the basis of the correct legal provision and proven facts.

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