2007 (1) TMI 462

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....the manufacture of polypropylene (PP) tapes and sacks of Chapter 39 of the CETA Schedule during the period of dispute (October 2004 to March 2005). In a show-cause notice covering the said period , the department demanded duty on the PP tapes manufactured and captively consumed in the manufacture of sacks and also proposed to impose penalty. In their reply to the notice , they contested the demand of duty on the ground of SSI exemption. In adjudication of the dispute, the Joint Commissioner of Central Excise confirmed the demand of duty of Rs. 6,14,313/- against the assessee under Section 11A of the Central Excise Act with interest thereon under Section 11AB of the Act and also imposed on them a penalty of Rs. 4.00 lakhs under Rule 25 of th....

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....on would not be available to them. 4. After giving careful consideration to the submissions , we find that, under Notification No. 221/86-C.E. ibid (as amended), plastic strips falling under Heading 39.20, manufactured and captively used in the manufacture of synthetic textile materials falling under SH 5406.90, were exempted from payment of duty of excise. The case of the Revenue is that the plastic sacks (final product) of the appellants were not classifiable under SH 5406.90 and therefore the benefit of exemption under the Notification would not be available to plastic tapes (intermediate product captively consumed) falling under Heading 39.20. As against this case of the Revenue, learned Counsel has submitted that the plastic sa....