MADURA COATS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The stay application and appeal arise from Order -in -Original No. 14/2002, dated 28 -3 -2002 by which the Commissioner of Central Excise, Madurai has confirmed demands and has also imposed penalty. The appellants were heard on the last date of hearing when the Vice President of the appellant company Shri S.S. Thakur drew our attention to various documents by which it is seen that the assessments pertaining to the item in question were provisional. In view of the documents shown to the Bench, the Bench called for report from the department with regard to the submissions made and ld. SDK has filed a report from the Joint Commissioner dated 15 -11 -2002. In the report the department does agree that the assessments were provisional. However it is contended that it is the case of the assessee that they had suo motu availed the facility of making deferred payment of duty by wrongly claiming the exemption under Notification No. 22/96, which is not applicable to them. The provisions for deferred payment are available under Rule 49A only. Inasmuch as the assessee had not followed the correct procedures stipulated under Rule 49A, the question of provisional assessment will be of no avail. Therefore it is contended that the provisional assessment pertaining to value determination will not vitiate the demand made in respect of non -payment of duty at the time of removal. Further it is stated that the demand is for non -payment duty by the appellant while following the provisions of erstwhile Rule 49A, suo motu. The provisional assessment covered by the B -13 bond executed by the assessee is with reference to valuation of the goods. It has nothing to do with the demand in question against which the present appeal relates.

(2.) Ld. Vice President Shri S.S. Thakur countered the statement by referring to the letter issued by the Deputy Commissioner which is at pages 118 -119 of the paper book. The Deputy Commissioner by letter dated Nil/01/2001 to the Commissioner of Central Excise, Madurai clarified that the appellant company is a composite Mill and yarn manufactured and conumed captively in the manufacture of both grey and processed fabrics. The yarn issued for the manufacture of grey or processed cannot be quantified at the time of issue for weaving. The processed fabrics are cleared on payment of appropriate fabrics duty. Most of the woven grey fabrics are cleared for export and the remaining are cleared for home consumption on payment of yarn duty. Hence the yarn content in the grey fabrics are determined in the reverse process on the basis of clearances made. It also states that as per Rule 49A the assessees are required to pay yarn duty on grey fabrics along with interest at the time of clearance but they paid only yarn duty without interest and hence show cause notices were issued demanding interest under Rule 49A for deferred payment of yarn duty on grey fabrics. The letter further clarifies that in this case there is no short payment of duty involved. Hence the demand cannot be issued by invoking Section HA. Since interest on the deferred payment of duty is demanded, the demand is raised under Rule 49A as per the directions of the Commissioner's letter mentioned. Ld. Representative on reading out this letter pointed out that there is no demand available for confirmation. He also points out that the duty has been paid when the yarn was used for non -dutiable grey fabrics which is dutiable. He also submitted that they have paid the interest oh protest after issue of show cause notice. Therefore even in terms of the show cause notice issued there is no demand as the statement of facts in the show cause notice itself confirms payment of duty. It is his submission that duty cannot be paid on the yarn when it is cleared for weaving section as it is a composite mill and the assessee would not know whether the yarn could be going for manufacture for duty payable or non -duty payable goods. In this regard he drew our attention to CBEC Clarification Budget 1996 -97 covering payment of duty pertaining to composite mills. He submits that the procedure was being followed for several years. The only grievance of the Commissioner was that permission was not obtained for paying duty at the final stage. On that account the duty cannot be confirmed as in the impugned order. He submits that the provisional assessments are there which has absolute bearing on the duty demands. He submits that the assessments are required to be provisional and only after finalising the quantum of yarn cleared on the non -dutiable final product and in terms of the letter of the Deputy Commissioner pointed above the procedure for demanding duty is determined in the reverse process on the basis of clearances made. Therefore he submits that since duty has already been paid as noted in the Deputy Commissioner's letter as well as in the show cause notice there is no question of further demand of duty or imposing penalty. He submits that the Commissioner has confused the issue and has not been able to grasp it which has led to pass the order. He submits that the order is not a speaking order and therefore requires to be remitted back for de novo consideration. He also points out from the Commissioner's order that the ld. Commissioner himself has noted the appellant's submission pertaining to the quantity of use of cotton yarn for different purposes which could be verified from the records. He submits that even having noted in Para 8 yet has proceeded to hold that the appellant have not established by evidence the quantity of use of yarn for said purposes. He submits that it is a contradictory finding when specifically it is shown that the duty had been paid including interest under protest. He submits that the matter could be remitted back for de novo consideration and the entire issue is looked into again and the demands are finalised.

(3.) Ld. SDR points out to Para 8 of the Order -in -Original wherein the Commissioner has stated that the assessee has not placed all the details to establish the use of the said quantity of yarn specified for purposes other than for manufacture of exempted grey fabrics. Therefore the demands are confirmable.