CENTURY DENIM AND ORS. Vs. CCE

JUDGEMENT

(1.) THERE are five appeals involved in this case. Appeal No. E/590/05 & E/591/05 have been filed by M/s Century Denim (hereinafter referred to as the Assessee) against order in appeal No. 5 & 6 -CE/IND/Appl -II/04 dated 27/01/05 passed by Commissioner of Central Excise (Appeals), Indore by which the duty demand of Rs. 12,58,10,773/ - (Rupees Twelve Crore Fifty Eight Lakhs Ten Thousand Seven Hundred and Seventy Three) for period from 01/4/99 to 30/06/01 and of Rs. 43,54,274/ - (Rupees Forty Three Lakhs Fifty Four Thousand Two Hundred and Seventy Four) for period from 01/7/01 to 28/02/02 were upheld. The oldest appeal E/1805/2000 is the Revenue's appeal against order in Original dated 26/3/99 passed by Commissioner of Central Excise, Indore by which a duty demand of Rs. 1,97,11,939/ - (Rupees One Crore Ninety Seven Lakhs Eleven Thousand Nine Hundred and Thirty Nine) for the period from 01/4/97 to 30/1/98 was dropped. This appeal of Revenue, along with another appeal of the Revenue wherein M/s Maral Overseas Ltd. was the respondent, were decided by the Tribunal vide order -in -appeal No. 47 -48/2001 -D dated 31/1/2001 by which both the appeals were allowed and the Commissioner's orders were set aside. The Tribunal, however, remanded both the cases to the Commissioner for deciding the applicability of longer limitation period of five years for demand of duty and quantification of the duty demand. M/s Maral Overseas filed an appeal under Section 35L(b) of the Central Excise Act to the Hon'ble Supreme Court, which was dismissed on 20/07/01. M/s Century Denim, however, filed a writ petition No. 699/01 against the Tribunal's order before Hon'ble M.P. High Court which was dismissed by the Hon'ble High Court on 27/11/02, and against the Hon'ble High Court's order, an SLP to Hon'ble Supreme Court was filed. Since prior to dismissal of CWP No. 699/01, stay had been vacated, the jurisdictional Commissioner vide dated 18/1/02 adjudicated the matter in case of the assessee in terms of the directions given in the Tribunal's order No. 47 -48/2001 -D dated 31/1/01 and confirmed the duty demand of Rs. 1,18,27,271/ - (Rupees One Crore Eighteen Lakhs Twenty Seven Thousand Two Hundred and Seventy One) for normal limitation period and dropped the demand of Rs. 77,87,664/ - (Rupees Seventy Seven Lakhs Eighty Seven Thousand Six Hundred and Sixty Four) for period beyond the normal limitation period. Against this order of the Commissioner, while the Assessee filed an appeal No. E/887/2002 -D, before the Tribunal, the Revenue filed a review appeal No. E -408/03 -NB before the Tribunal challenging the dropping of the duty demand of Rs. 77,87,664/ - as time -barred. The Assessee's SLP No. 9868/2005 before the Hon'ble Supreme Court against Hon'ble MP High Court's order dated 27/11/02 was decided by the Hon'ble Supreme Court on 26/10/07 along with appeal involving identical issue of M/s Vanasthali Textile Industries and vide its order set aside the Hon'ble M.P. High Court's order and remanded the matter to this Tribunal for deciding this matter in the light of its directions in the order. As a consequence of setting aside of the Hon'ble M.P. High Court's order by the Hon'ble Supreme Court, the Revenue's appeal No. E/1805/2000 -D gets restored for hearing by this Tribunal in terms of the remand order of the Hon'ble Supreme Court. Thus the Appeal No. E/1805/2000 -D, E/887/2002 -D and E -406/2003 -NB pertain to duty demand of Rs. 1,97,11,939/ - (Rupees One Crore Ninety Seven Lakhs Eleven Thousand Nine Hundred and Thirty Nine) against the assessee for period from 01/4/97 to 30/1/98, Appeal No. E/390/05 pertain to the duty demand of Rs. 12,58,10,773/ - (Rupees Twelve Crore Fifty Eight Lakhs Ten Thousand Seven Hundred and Seventy Three) against the assessee for period from 01/4/99 to 30/06/01 and appeal No. E/591/2005 pertains to duty demand of Rs. 43,54,274/ - against the assessee for period from 01/7/01 to 28/2/02. The issue involved in all these appeals is common.

(2.) THE assessee is a 100% EOU manufacturing in their factory at Khangore, M.P., grey as well as coloured Denim fabrics. Denim is a hundred percent cotton fabric and the cotton used is of indigenous origin. However, for manufacture of Blue Denim, an imported dye called "Indigo Pure" is used by the assessee. The assessee, as a 100% EOU, are allowed, as per the EXIM policy, to sell a part of their production, as determined by the Development Commissioner, to DTA The DTA clearances of a 100% EOU or a unit in Free Trade Zone, attract Central Excise Duty, which, as per the proviso to Section 3(1) of the Central Excise Act, is an amount equal to the aggregate of duties of Customs leviable under the Customs Act, 1962 or any other law, for the time being in force, on import of like goods into India. Notification No. 8/97 -CE dated 01/3/97 exempts "the finished products, rejects and waste or scrap, specified in the schedule to the Central Excise Tariff Act, 1985 and produced or manufactured in a 100% EOU or a unit in Free Trade Zone, wholly from raw -materials, produced or manufactured in India, and allowed to be sold in India in accordance with the provisions of para 02 & 114 of 1992 -97 EXIM policy", from so much of the duty of excise, as is in excess of the amount equal to the Central Excise Duty chargeable on like goods produced or manufactured in a DTA unit in India, subject to condition that the like goods produced and manufactured in a DTA unit and cleared to DTA are not wholly exempt from duty or chargeable to duty at nil rate. The point of dispute in these appeals is whether the Blue Denim cloth manufactured by the Assessee is finished excisable goods manufactured wholly from the indigenous raw materials and whether its DTA clearances are eligible from the exemption under notification No. 8/97 -CE. There is no dispute that except for imported Indigo dye used for dyeing the warp yarn, all other input materials are of indigenous origin i.e. produced or manufactured in India.

(3.) SHRI Joseph Velapally, Advocate, the learned senior counsel on behalf of the Assessee made the following submissions: