TaxTMI 
TaxTMI 
TaxTMI 
2013 (8) TMI 571
X X X X Extracts X X X X
X X X X Extracts X X X X
....vy of 12% was prescribed, if the manufacturer avails CENVAT credit and full exemption available, if credit was not taken. Appellants at their Mahape unit were manufacturing Knitted Fabrics (unprocessed) falling under S.H.No. 6002.92, from duty paid bought out yarn (inputs). The appellant did not take any CENVAT either on inputs or capital goods. The said grey knitted fabrics were stock transferred from their Mahape unit to their Pawane unit, by availing exemption under Sr. No.10 of Notfn. 14/2002-CE dtd. 1.3.2002, after satisfying condition No.1. In their Pawane unit, the said fabrics were subjecting to processing and processed knitted fabrics are cleared by availing exemption under Sr.No.12 of Notfn.14/2002-CE ibid, by satisfying condition No.3. The availment of exemption under Notification 14/02 was denied and show-cause notices dated 03.04.2003 and 09.01.04 were issued. The said show-cause notices were adjudicated and impugned demands have been confirmed on the premise that the appellants are not entitled to take exemption at Sr.no.12 of Notification 14/02. Against the said order, appellants are before us. 3. Shri M.H.Patil, ld. counsel for the appellant appeared and submitted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y. Therefore, credit is not available. In this connection, the ld. counsel submits that in para 1.8 of letter F.No.344/1/2002-TRU dated 28.2.2002 from the Joint Secretary it has been clarified that the option under Notification No. 14/2002-CE is to be exercised by a manufacturer of the products mentioned in the said Notification, for all the clearances and it is not permissible that on some clearances he would like to pay duty and remove the others without payment of duty. However, there was no clarification anywhere that if the fabrics mentioned in Notification No. 14/2002-CE were manufactured from yarn, which could clearly be recognized as non-duty paid, the benefit under the said Notifcation is not available. 4. CBEC also clarified through its Circular No. 667/58/2002-CX dated 26.9.2002, based on decision of Hon'ble Apex Court in the case of Dhiren Chemical Industries 2002 (139) ELT 3 (SC) that, whenever an exemption is subject to the condition that appropriate duty of excise has been paid on the inputs, the exemption will not be available if the inputs are exempted from excise duty or are subject to nil rate of excise duty. The CBEC through its Telex F.No. 3785/11/2002-TRU dat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....relevant portion of Explanation II and Explanation VII (1) and entries at Sr.No. 10 & 12 with corresponding condition No.1 & 3 are as reproduced below: "Xxxxx xxxxx xxxxx Explanation II.- For the purposes of the conditions specified below, textile yarns or fabrics shall be deemed to have been duty paid even without production of documents evidencing payment of duty thereon. "Xxxxx xxxxx Explanation-VII- In this notification, - (1) for the removal of doubt, it is hereby clarified that in Explanation II and in condition Nos. 1 and 2 specified below the table, the expression "textile yarns" is intended to include therein "textile fibres" also; "Xxxxx xxxxx xxxxx Sr.No. Chapter or Heading No., or sub-heading No. Description Rate of duty Condition Xx Xxxx Xxxx xxxx Xxxx 10 6001.11, 6001.21, 6001.91, 6002.42 or 6002.92 Knitted or crocheted fabrics of cotton, not subjected to any process Nil 1 Xx Xxxx Xxxx xxxx Xxxx 12 6001.11, 6001.21,60....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fication No. 37/2002-CE), textile fibres, yarns and fabrics bought from the market have been deemed to have been duty paid. Thus, a composite mill, i.e., a manufacturer engaged in the processing of fabrics along with spinning of yarn from fibres and weaving of fabrics within the same factory, manufacturing processed textile fabrics in a continuous process from textile fibres, bought from the market, would attract an aggregate excise duty of 12% ad valorem thereon. Further, unprocessed woven textile fabrics manufactured within the said composite mill and used therein in manufacture of processed textile fabrics is exempt from excise duty subject to fulfillment of the condition that appropriate duty is paid on processed textile fabrics, in accordance with notification No. 22/96-CE. Similarly, a manufacturer engaged in the processing of fabrics along with weaving of fabrics within the same factory in a continuous process from textile yarns, bought from the market, would attract an aggregate excise duty of 12% ad valorem. 5. It is further clarified that the principal raw material in the case of a composite mill would be textile fibres while in the case of a manufacturer en....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich the appropriate duty of excise leviable under the First Schedule or the Second Schedule to the said Central Excise Tariff Act read with any notification for the time being in force or the additional duty of Customs leviable under Section 3 of the Customs Tariff Act, 1975, as the case may be, has been paid."(Yarns include fibres as per Explanation VII.) 5. If made from textile fabrics, whether or not processed, on which the appropriate duty of excise leviable under the First Schedule to the said Central Excise Tariff Act and the Additional Duties of Excise (Goods of Special Importance) Act, read with any notification for the time being in force or the additional duty of customs leviable under Section 3 of the Customs Tariff Act, 1975, as the case may be, has been paid." In both the conditions the words used are "on which the appropriate duty of excise leviable.......... read with any notification for the time being in force........ has been paid." In the case of the appellants, the adjudicating Commissioner has denied the exemption on the ground that the fabrics have been manufactured in continuous process from the spinning stage and hence no duty has....