2003 (1) TMI 613

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....ton Yarn as well as Cotton Fabrics. Cotton yarn is being cleared by them to outside parties on payment of duty as also is being consumed by them captively in the manufacture of Cotton Fabrics. The appellants were issued a show cause notice alleging that during the period from 20-5-1994 to 10-8-1994, they have consumed captively a quantity of 589254.000 Kgs. of Cotton Yarn falling under sub-heading No. 5203.00 of the Schedule to the Central Excise Tariff Act, without payment of duty. As such they have contravened the provisions of Central Excise Law. Accordingly, the notice demanded the duty in respect of the Yarn in question on the ground that as per the provisions of Rule 9, such issuance of Yarn for captive consumption was also a deemed r....

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....levant facts in this regard. (ii) The Asstt. Commissioner had grossly erred in concluding that the charges contained in the subject show cause notice were misconceived and that the question of violation of Rule 9(1) including other rules did not arise as the assessee was working within the meaning of Rule 49A. The provisions of Rule 49A would apply only to such quantity of Cotton Yarns which are contained in Cotton Fabrics manufactured therefrom. It will not apply to Cotton Yarns which are removed for captive consumption for manufacture of Cotton Fabrics, but are not actually contained in such Cotton Fabrics removed from the factory. Further, during the material period covered under the impugned Show Cause Notice there was no exemption f....

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....id duty on the captively consumed Yarn. When the attention of the adjudicating authority was drawn to the provisions of Rule 49A, he accepted the same and vacated the show cause notice. The Commissioner (Appeals), while accepting the Revenue's appeal, has gone altogether with a different new fact when he had observed that the duty demanded by the Department was on that much quantity which had not gone into the manufacture of fabrics. Shri Bagaria, learned Advocate further submits that whatever quantity has gone into the manufacture of fabrics, has paid duty. Accordingly, he submits that the appeal be allowed and the impugned Order passed by the Commissioner (Appeals) be set aside. 7  Countering the arguments, Shri A.K. Mondal, learn....