TaxTMI 
TaxTMI 
2009 (5) TMI 216
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....e duty has been paid. The department has taken up investigation on the ground that appellant is not eligible for exemption on the dyed yarn manufactured out of twisted yarn which had not suffered any duty and after adjudication process duty demand amounting to Rs. 2,57,11,318/- has been confirmed with equal amount of penalty imposed upon the appellant. Interest as applicable has also been demanded. Penalty of Rs. 12,50,000/- has also been imposed on Shri Mohan Gupta, Managing Director of the appellant (second appellant for short). Both the appellants are in appeal against the above order of Commissioner. 2. Learned Adv. Shri P.M. Dave, on behalf of the appellant submits that the appellant is engaged in manufacture of dyed polyester yarn. Appellant was using Texturised Yarn as well as Twisted Tarn for dyeing. Both Texturised Yarn and Twisted Yarn are manufactured out of duty paid Yarn. He submitted that Board had issued a Circular No. 125/36/95-CX, dated 15-5-1995 wherein it was stated that exemption has been provided subject to the condition that exempted goods have been manufactured out of duty paid goods, even if the input are exempted from excise duty, exemption o....
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....nd appellants are not eligible for exemption, the cut off date should be 26-9-2002, the date on which the CBEC issued the second Circular. He also submits that even on merits they have a strong case in view of the decision of the Tribunal in the case of Precot Mills Ltd v. CCE, Bangalore [2005 (183) E.L.T. 407)] wherein it was held that appellants were eligible for the benefit of exemption on dyed yarn even if manufactured out of doubled Yarn on which, no duty was paid, even if duty was paid on the doubled yarn, modvat credit was available for utilization. He also cites the decision of the Hon'ble Supreme Court in Padmini Product case [1989 (43) E.L.T. 195 (S.C.)] and Chemphar Drugs & Liniments case [1989 (40) E.L.T. 276 (S.C.)] to support his case that mere negligence of the manufacturer to take out license or pay duty when there was scope of doubt that the goods are excisable extended period under Central Excise Act, 1944, would not be applicable. He also submits that even after issue of circular by the Board on 26-9-2002, exemption was allowed by the Revenue without any objection because of the long standing legal position. 3. Learned DR on the other hand submits that it not ....
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....ing Industry case (2004 (168) E.L.T. 145 (S.C.) 6. We have noticed that Para 9 of Dhiren Chemical's case is being misunderstood. It therefore becomes necessary to clarify Para 9 of Dhiren Chemical's case. One of us (Variava, J.) was a party to the Judgment of the Dhiren Chemical's case and knows what was the intention in incorporating Para 9. It must be remembered that law laid down by this Court is law of the land. The law so laid down is binding on all Courts/Tribunals and Bodies. It is clear that circulars of the Board cannot prevail over the law laid down by this Court. However, it was pointed out that during hearing of Dhiren Chemical's case because of circulars of the Board in many cases the Department had granted benefits of exemption Notifications. It was submitted that on the interpretation now given by this Court in Dhiren Chemical's case, the Revenue was likely to reopen cases. Thus Para 9 was incorporated to ensure that cases where benefits of exemption Notification had already been granted, the Revenue would remain bound. The purpose was to see that such cases were not reopened. However, this did not mean that even in cases where Revenue/Department had already conte....
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.... said that such a belief was not a bona fide belief. It can be said at best that appellant neglected to start paying duty from 26-9-2002, but the fact remains that department also would have issued show cause notice within one year from that date. He also drew support from the decision of the Supreme Court in Padmini Products case and Chemphar Drugs & Liniments case. On the other hand DR submits that nowhere it was reflected that raw material used were exempted from payment of duty and raw material account also did not show that raw material suffered any duty. In this case classification declaration was filed and it was verified by the officers of the department. Apparently, if exemption under this Notification is claimed, clearly such verification has to raise a question, as to whether input has suffered duty. Needless to say, prior to 26-9-2002, the departmental officers would not have verified, so long as circular issued by the Board in 1995 was in force, but subsequent to 26-9-2002, such verification was required. As argued by the Ld. Advocate suppression would require something more than negligence. At best it can be said that applicant neglected to inform the Revenue after&nb....