BHILWARA SYNTHETICS LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal has been filed by the appellants against the order in original dated 19.9.97 passed by the Commissioner confirming demand of Rs. 61,94,106.58 under Section 11 -A of the Central Excise Act, 1944 against them.

(2.) THE facts giving rise to this appeal may briefly be stated as under: -

(3.) THE appellants are engaged in the manufacture of single ply yarn/manmade blended yarn falling under Chapters 51/55 of the Central Excise Tariff Act, 1985. They also consumed captively the single ply yarn in the manufacture of double and multifold yarn. Prior to 20.5.94 they had been clearing single ply yarn without payment of duty for the manufacture of the double/multifold yarn as the same was permissible by the provisions of Rules 9 and 49 read with Rule 56 -A of the Central Excise Rules but by Notification No. 23/94 -CE (NT) dated 20.5.94 the third proviso to Rule 9(1) and Sub -rule (4) of Rule 49 and Rule 56 -A were omitted and as a result thereof the Central Excise duty became payable at single ply yarn stage from 20.5.94. However, thereafter by Notification No. 121 /94 -CE dated 11.8.94 the single ply yarn again became exempt from payment of duty if consumed captively in the manufacture of double/multifold yarn cleared on payment of duty. But during the intervening period of 20.5.94 to 10.8.94 the appellants were liable to discharge duty liability on single ply yarn before its captive consumption for manufacture of double/multifold yarn, but they did not do so. They were served with a show cause notice dated 30.11.94 raising demand of excise duty of Rs. 66,15,535.83 under Rule 9(2) read with Section 11 -A of the Act, in respect of single ply yarn and manmade yarn which they had cleared without payment of duty for captive consumption for the manufacture of double/multifold yarn during the period 20.5.94 to 10.8.94.