CCE Vs. K.G. DENIM LTD.

JUDGEMENT

(1.) THESE appeals are by the Revenue, aggrieved by an order passed by learned Commissioner (Appeals) allowing the benefit of deemed Modvat credit to the respondents under Notification No. 29/96 -CE (NT) dated 3.9.96 in respect of the differential duty paid by them on processed cotton fabrics (denim fabrics) at the time of clearance of the goods from their depots. The respondents, during the periods of dispute, cleared denim fabrics to M/s. Indigo Fabrics (their own division/depot) on payment of duty by availing deemed credit equivalent to 50% / 60% of such duty. When these goods were subsequently cleared from the said division/depot, an additional amount of duty was paid as the depot price was higher than the factory price. At the time of such payment of duty also, deemed credit equivalent to 50% / 60% was availed in terms of the above Notification, which was objected to by the department. Show -cause notices were subsequently issued, covering different periods, by the department seeking to recover "extra" credit taken by the assessee at the time of removal of the goods from their depot. The demand was contested. In adjudication of the dispute; the original authority disallowed the deemed credits taken on the additional amounts of duty paid by the assessee at the time of clearance of the goods from their depot. It also imposed penalties on them. In the appeals preferred by the assessee against the orders of the original authority, learned Commissioner (Appeals) took the view that deemed credit of duty was admissible to them on the total Excise duty paid by them. Accordingly, the assessee's appeals were allowed. Hence the present appeals of the Revenue.

(2.) THE appellant is represented by ld. SDR, who reiterates the grounds stated in the memo of appeals. There is no representation for the respondent despite notice. We think, we will not be justified in adjourning hearing in these appeals of the year 1999, which have got to be disposed of without further delay. Accordingly, we take up the appeals.

(3.) NOTIFICATION No. 29/96 -CE (NT) ibid contained the Central Government's declaration as to inputs and final products in respect of which the benefit of deemed Modvat credit envisaged under the said Notification would be available. In this case, it is not in dispute that denim fabrics manufactured and cleared by the respondents were declared as final products and its raw materials were declared to be inputs, for the purpose of the above Notification. It was further declared by Govt. in the above Notification that the duty of excise under the Central Excise Act, the Additional Duty under Section 3 of the Customs Tariff Act and the Additional Duty of Excise under Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 shall be deemed to have been paid on the above inputs. The Notification also allowed deemed credit of such duty to textile mills, which was equivalent to the amount calculated as a percentage of the duty of excise leviable on the final product under the Central Excise Act read with any Notification for the time being in force. In the present case, such credit was available to the respondents to the aforesaid extent, which was 50% / 60% of the duty paid on the final product. When the assessee removed fabrics from their factory, they paid duty on the price adopted by them. But when it was subsequently removed from their depot at a higher price, differential duty also was paid by them. The duty leviable on the goods, therefore, was the total duty paid on the goods by the time it was cleared from the depot. Deemed Modvat credit on inputs was admissible to them to the extent of 50% / 60% of this duty as rightly held by learned Commissioner (Appeals). The fact that a part of this duty was paid at the time of clearance from the factory and the balance paid at a later stage at depot was immaterial. What matters is that the appropriate duty of excise was paid by the assessee on a given quantity of goods covered by the above Notification. There being no dispute with regard to eligibility of the respondents for the above benefit otherwise, there is no reason to deny the benefit to them. The benefit of the beneficial Notification was rightly allowed by the lower appellate authority.