SHREE SYNTHETICS LTD. Vs. CCE

JUDGEMENT

(1.) APPEAL at the instance of the assessee it directed against the order passed by the Commissioner of Central Excise dated 30.12.2001.

(2.) APPELLANT is manufacturing nylon yarn of various deniers including nylon yarn of 210 denier which is exempted from payment of duty vide different notifications during the years 1996 -97 to 2000 -2001. The period with which we are concerned is from October 96 to March 2001. The main raw material/input for the manufacture of nylon yarn is Caprolactam which is being procured by the appellants from the market on payment of excise duty. By certain process, caprolactam is converted into nylon chips from which 210 denier yarn is processed. Appellant was clearing nylon yarn 210 of denier without payment of duty as it was exempted. It, therefore, reversed credit taken on caprolactam. Under notice dated 22.5.2001 the appellant was required to show cause as to why the central excise duty amounting to Rs. 34,00,048 should not be demanded under proviso to Section 11 -A of the Central Excise Act, 1944. It was contended in the show cause notice that the appellant was evading central excise duty by wrongly availing the exemption under Notification No. 67/95 -CE dated 16.3.95 on nylon chips manufactured and captively used in the manufacture of exempted final product namely nylon yarn of 210 denier. Since the final product was exempted from payment of duty, intermediate product namely nylon chips were chargeable to duty with effect from 1.3.94 as Notification No. 85/91 -CE dated 30.8.91 which granted exemption to polyamide chips if used in the nylon filament yarn, was rescinded by Notification No. 63/94 -CE dated 1.3.94. Before the Commissioner, assessee contended that it is entitled to the benefit of the ratio of the decision of this Tribunal in J.K. Synthetics v. CCE, Jaipur 2000 (122) ELT 38. On the above basis, it is entitled to recredit of the amount reversed.

(3.) IT was also contended that value of nylon chips for the purpose of calculation of duty amount for the period of five years was wrongly taken relying on two bills issued in August 2000, The rate of chips in one year cannot be made basis for the entire period of five years. It was also contended that appellant was not selling chips regularly. Only small quantity was sold occasionally and entire production was consumed in the manufacture of nylon yarn. Therefore, submission of the assessee before the Commissioner was that the value has to be made on the basis of the costing. Assessee also submits that demand is barred by limitation.