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Supreme Court Of India
Commissioner of Central Excise, Mumbai- I - Appellant
Versus
Bombay Dyeing & Mfg.Co.Ltd - Respondent
Decided On : 08/08/2007
Interpretation of Notification No. 14/2002-CE - Exemption - 5110.10, 5111.10, 5207.20, 5208.20, 5209.10, 5406.10, 5407.10, 5511.10, 5512.10, 5513.10, 5514.10, 5801.11 or 5802.51 - The court discussed the conditions for claiming exemption under the notification, specifically focusing on the payment of duty on yarn and the availing of CENVAT credit. The court emphasized that the mode of payment was not prescribed and that payment of duty on yarn on a deferred basis before clearance of grey fabrics satisfied the conditions for claiming exemption, resulting in the grey fabrics attracting a nil rate of duty.
Fact of the Case:
The case involved the interpretation of Notification No. 14/2002-CE and the dispute over the payment of duty on yarn and availing of CENVAT credit by the assessee. The Department contended that the assessee failed to comply with the conditions for claiming nil rate of duty on grey fabrics, leading to a demand for differential duty for a specific period. The Commissioner (A) allowed the payment of duty on yarn at the time of clearance of grey fabrics, which was confirmed by the Tribunal, prompting the Department to file a civil appeal.
Finding of the Court:
The court found that the mode of payment was not prescribed under the notification and that the payment of duty on yarn on a deferred basis before clearance of grey fabrics satisfied the conditions for claiming exemption. It held that the assessee was entitled to claim the benefit of exemption at a nil rate of duty, dismissing the civil appeal filed by the Department.
Issues: The main issue revolved around the compliance with the conditions for claiming exemption under Notification No. 14/2002-CE, specifically regarding the payment of duty on yarn and the availing of CENVAT credit by the assessee.
Ratio Decidendi: The court emphasized that the mode of payment was not prescribed and that payment of duty on yarn on a deferred basis before clearance of grey fabrics satisfied the conditions for claiming exemption, resulting in the grey fabrics attracting a nil rate of duty.
Final Decision: The civil appeal filed by the Department was dismissed, and no order as to costs was issued.
JUDGMENT
KAPADIA, J.
Interpretation of Notification No. 14/2002-CE arises for determination in this civil appeal filed by the Department.The facts giving rise to this civil appeal are as follows:
2.The assessee has two textile mills in Mumbai known as the Spring Mills and the Textile Mills. This civil appeal relates to the former. Spring Mills is a composite name of the mill in which there is a spinning section where yarn is spun from raw cotton, and a weaving section where grey fabrics is woven from such yarn. The grey fabrics woven in the Spring Mills are not processed at Spring Mills. Most of the grey fabrics manufactured by the assessee are processed by the Textile Mill though some quantity thereof is sold to third parties. In this civil appeal, we are concerned with the period 13.3.2002 to 15.9.2002. In this civil appeal, we are not concerned with quantification. That question is even today pending adjudication.
3.At the outset, we quote hereinbelow notification no. 14/2002-CE granting exemption, both full and partial to a range of goods. As stated above, in this civil appeal we are concerned with the item, namely, grey fabrics manufactured by the assessee. In this civil appeal, we are concerned with the interpretation of item 1 and item 2 of the table to the notification.
"Notification No.14/2002-CE dated 01-Mar-2002
Processed textile fabrics Effective rate of duty Notification No. 11/2001-C.E. superseded.
In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act,1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 11/2001-Central Excise, dated the 1st March, 2001, published in the Gazette of India vide number G.S.R. 136 (E), dated the 1st March, 2001, except as respects things done or omitted to be done before such supersession, the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below and falling within the Chapter, heading No. or sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), specified in the corresponding entry in column (2) of the said Table, from so much of the aggregate of,
(a) the duty of excise specified in the First Schedule to the said Central Excise Tariff Act; and
(b) the duty of excise specified in the First Schedule to the said Additional Duties of Excise (Goods of Special Importance) Act, (hereinafter referred to as the aggregate duty) as is in excess of an amount calculated at the rate specified in the corresponding entry in column (4) of the said Table, subject to the relevant conditions specified below the said Table, and referred to in the corresponding entry in column (5) of the said Table:
Provided that the aggregate duty of sixteen per cent. ad valorem leviable on the excisable goods specified in S. No. 9 of the Table below shall be apportioned equally between the duty leviable under the said Central Excise Act and the said Additional Duties of Excise (Goods of Special Importance) Act:
Provided further that-
(a) during the period commencing from the 1st day of March, 2002 and ending on the 28th day of February, 2005, the aggregate duty in respect of the goods specified against S.Nos. 2, 3, 4, 5, 6, 7, 8, 11, 13, 15 and 16, shall be further exempted in excess of three-fourths of the rate specified in the corresponding entry in column (4) of the said Table; and
(b) during the period specified in clause (a) above, the duty leviable on the excisable goods specified therein, shall be apportioned in the ratio 2:1 between the duty leviable under the said Central Excise Act and the said Additional Duties of Excise (Goods of Special Importance) A
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