VIJAYESWARI TEXTILES LTD. Vs. CCE

JUDGEMENT

(1.) THE Appellants herein were engaged in the manufacture of textile articles such as made -ups, purchased duty -free materials i.e. cotton yarn and packing materials by executing the required bond. They cleared made -ups for export and also cleared end -bits of fabrics to the local market by discharging duty at the rate of 12% ad valorem as per Notification No. 14/2002 -CE dated 1.3.2002. The benefit of concessional rate of duty of 12% was applicable only on satisfaction of Condition No. 5 of the Table annexed to the Notification read with Explanation VII Clause (2) of the Notification. As duty liability had not been discharged on yarn, the Department alleged that the payment of 12% was not payment of appropriate duty and that the Assessees were required to discharge duty @ 24% and on this basis notice dated 12.8.2003 was issued proposing recovery of differential duty of Rs. 3,30,319/ - on the end -bits of fabrics and also proposing penalty. The demand was confirmed by the Deputy Commissioner who also imposed equal amount of penalty and his order was upheld by the Commissioner of Central Excise (Appeals), Coimbatore; hence this appeal.

(2.) WE have heard both sides. The relevant extracts from the Notification No. 14/2002 dated 1.3.2002 are reproduced herein below:

(3.) OPPOSING the prayer for setting aside the demand and penalty, learned SDR submits that Explanation II will not come to the rescue of the Assessees in the present situation where there is no dispute that the yarn procured by the Assessees did not discharge duty liability and that Explanation II will be attracted only in the case of duty paid goods for which an Assessee may not be in a position to produce duty paying documents. He submits that since the yarn procured by the Assessees under bond was admittedly without payment of duty, Condition No. 5 has not been satisfied and therefore the benefit of concessional rate of duty as per Sl. No. 4 read with Clause 2 of Explanation VII is not applicable and the Assessees are required to discharge duty @ 24% ad valorem without the benefit of the notification. As far the decision of the Tribunal cited by the learned consultant is concerned, the learned SDR submits that it is not relevant to the issue in dispute as the issue before the Tribunal in that case was as to whether for the purposes of Notification No. 48/77 -CE dated 1.4.1977, goods exported under bond can be considered as duty paid clearances and the Tribunal held that it is permissible to treat export under bond as duty paid clearance since no duty is required to be paid on such export while in the present case the demand is not on the goods not cleared for export but the end -bits not exported but cleared into the local market.