SCAN SYNTHETICS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) M /s. Scan Synthetics Ltd., the appellants herein, were engaged in the manufacture of grey textured yarn and dyed man -made filament yarn during the period of dispute (March, 2000 to Jan., 2001). They manufactured grey textured yarn out of its raw materials. This yarn, which was input for manufacturers of elastic tapes, etc., was sold to such manufacturers without physical delivery of the goods. The invoices under which this yarn was cleared by the appellants, were, however, sent to the said manufacturers of final products, who would, in turn, issue and dispatch delivery challans to the appellants for purposes of Rule 57J/57AC. While so, the grey textured yarn covered by such invoices and delivery challans were retained by the appellants for captive use in the manufacture of dyed yarns, The dyed yarns so manufactured by the appellants were then cleared to the aforesaid manufacturers of final products under cover of the same challans. The dyed yarn was then used by the said manufacturers (appellants' customers). The customers had undertaken to the Asstt. Commissioner of Central Excise having jurisdiction over the appellants' factory that the grey textured yarn would be used in or in relation to the manufacture of their final products. They had also undertaken to discharge the duty liability in respect of their final products. These undertakings were in terms of Notification No. 214/86 -C.E., dated 25 -3 -86 (as amended). The clearance of the dyed yarn under the challans by the appellants to their customers (manufacturers of final products) was effected without payment of duty. In doing so, the appellants were claiming the benefit of the above Notification. This was 'objected' to by the department. The department maintained that the appellants' product viz. dyed yarn was not an intermediate product to attract the benefit under the Notification but a final product chargeable to duty of excise. The department did not recognise the appellants as job workers for the manufacture of elastic tapes, etc. Accordingly, the department, by Show Cause Notice, demanded duty on the dyed yarn cleared during the period of dispute, and also proposed to impose penalty on them. The demand and the proposal for penalty were resisted. In adjudication of the dispute, the jurisdictional Addl. Commissioner confirmed the demand of duty under Section 11A and imposed on the appellants, a penalty of Rs. 1 lakh under Rule 173Q. The aggrieved party preferred appeal to the Commissioner (Appeals). They relied, inter alia, on the decision of this Tribunal's Larger Bench in the case of Maruti Udyog Ltd. v. CCE, New Delhi [2000 (118) E.L.T. 43 (Tribunal -Larger Bench)] before the ld. Commissioner (Appeals). The Commissioner (Appeals) in his own way distinguished the cited decision from the instant case and held it to be inapplicable. He upheld the decision of the lower authority. Hence the present appeal.

(2.) HEARD both sides.

(3.) LD . Counsel for the appellants submits that the issue in this case is covered by the decision of Larger Bench Maruti Udyog (supra).