PARASRAMPURIA SYNTHETICS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE issue involved in this appeal, filed by M/s. Parasrampuria Synthetics Ltd., are whether the Polypropylene filament yarn of 500 denier (PPFY) manufactured by them is chargeable to Central Excise duty and whether the demand of duty is time barred.

(2.) SHRI K.K. Anand, learned advocate, submitted that the Appellants manufacture, inter alia, PPF Yarn of various deniers as well as PPFY draw twisted (DT) and flat twisted yarn of 210 deniers; that during the course of manufacture of yarn of 210 elongation in the range of 300 -400% or more; that Northern India Textile Research Association (NITRA) has also opined in its Report dated 18.4.2001 that "This Polypropylene filament yarn sample is a LOY Yarn and its shelf life is very Low as compared to POY yarn."; that these Test Reports clearly show that they were manufacturing LOY which does not attract Central Excise duty; that these reports have been discarded merely on the ground that responsible persons of the Appellants have clearly admitted manufacture of 500 denier yarn and its use in the manufacture of 210 denier without payment of duty by wrongly availing Notification No. 67/95 -CE. He also relied upon the Board's Circular No. 16/90 -CX -1 dated 23.5.1990 in which the Board, after going through the manufacturing process, has clarified that undrawn yarn at take up stage is stored under certain temperature and humidity condition before they are taken for drawing or draw texturing otherwise undrawn yarn would deteriorate and cannot be used for manufacture of textile for weaving or knitting purpose; that the Board has held that at this stage they are still in the semi -finished stage and are not marketable; that their manufacturing deniers, which is exempted from payment of duty under Notification No. 5/99, they were manufacturing PPFY yarn of 500 deniers which was captively used without payment of duty; that after visit of Central Excise officers of their premises on 3.10.2000, a show cause notice dated 13.12.2001 was issued to them for demanding duty on PPFY yarn cleared during the period July, 1999 to September 2000 and for imposing the penalty. He, further, submitted that yam of 500 deniers comes into existence only at the intermediate stage and it is not marketable; that they have a conventional type of machine which had no infrastructure to provide partially oriented yarn (POY) which is marketable commodity and accordingly PPFY manufactured by them is not marketable and accounted for in RG I only to monitor the wastage; that low oriented yarn manufactured by them is neither bought nor sold in the market because of its very short shelf life; that "The Synthetic and Art Silk Mills" Research Association (SASMIRA) in its Test Report opined that the product has Elongation at break 534 on Day 1,505.6 on Day 3 and 568 on Day 7 and as per Note appended to Test Report Low Oriented Yarn or undrawn yarn have process is similar to the process discussed in paras 3 and 4 of the Circular. He relied upon the decision in the case of Moti Laminates Pvt. Ltd. v. CCE wherein it was held that goods are dutiable only if they are marketable or capable of being marketed. He also mentioned that in Taxation matter there is no estoppels as held by the Supreme Court in Dunlop India Ltd. v. UOI 1983 ELT 1566 (SC) and contended that even after admission by their executives, they can plead non -excisability of the product in question.

(3.) THE learned Advocate also submitted that the entire demand of duty is time barred since all the clearances were as per the classification declarations where it had been specifically mentioned that yarn was being used captively from manufacture of other yarn which were cleared on payment of duty; that they had filed a Technical Write -up With the Department describing the process of manufacture of Polypropylene Filament yam; that they had submitted, under their letter dated 2.7.99, a lay out plan for LOY plant for manufacture of PPFY; that they were also reversing the MODVAT Credit of the duty paid on inputs used in the manufacture of 500 deniers yarn before its clearance which shows their bona fide; that even they were issuing the invoices before removing the yarn in question; that Central Excise officers had visited their factory many a times and as such everything was known to them. He relied upon the decision in the case of Pushpam Pharmaceuticals Company v. CCE, Bombay and in the case of CCE v. Chemphar Drugs and Liniments . He placed reliance also on the decision in the case of Jay Yushin Ltd. v. CCE, New Delhi 2000 (39) RLT 501 (CEGAT -LB) wherein Larger Banch of the Tribunal has held that extended time limit is not applicable in case of availability of Modvat Credit to the assessee himself. He also claimed that they would in any case be eligible to take MODVAT Credit amounting to Rs. 28,75,408 which was reversed by them and as such only a duty of Rs. 4,89,001 would be payable by them. He relied upon the decision in the case of Hindalco Industries Ltd. v. CCE, Allahabad 2001 (44) RLT 148 and J.K. Synthetics Ltd. v. CCE, Jaipur . Finally he submitted that no penalty is imposable on the Appellants at all and that too both under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules; that in any event, the penal action, if any, has to be ordered keeping in view the duty amount finally payable.