Per Gowri Shankar :

Each of the two respondents to these appeals was engaged in processing of bleached fabrics received in its factory. After such processing the fabrics were removed without payment of duty in terms of Notification 47/94 by following the chapter X procedure to persons, manufacturing unspecified textile articles out this. These articles were exported. Each of the respondents had taken modvat credit on the duty paid on the fabrics. Three notices were issued to M/s. Omkar Textile Mills and one to M/s. Alok Synthetics, proposing to recover modvat credit on the ground that it is only the credit of duty paid on partially process fabrics which can be taken and not that on bleached fabrics. Adjudicating on the notices the Assistant Commissioner held in two of his orders, which are subject matter of Appeals E/3395/99 and E/3396/99 that credit could not be denied on the ground that the bleached fabrics were not inputs. In one of the other two orders he suggests although he does not clearly specify them. He proceeded to deny credit on the ground that finished products had been removed without payment of duty under chapter X procedure. He also imposed penalty on each of these assessees.

2. The assessees appeals against these orders to the Commissioner (Appeals). He allowed these appeals by following the ratio of the decisions of the Tribunal in Orissa Synthetics Vs. CCE 1995 (77) ELT 350; Reliance Industries Vs. CCE, 1995 (9) RLT 317=1995 (78) ELT 595 and Sriram Rayons Vs. CCE, 1999 (31) RLT 633=1999 (107) ELT 26 that removal of goods without payment of duty for export in terms of Rule 13 could not be considered to be removal without payment of duty or at nil rate of duty as specified in Rule 57C and concluded that this rule therefore will not apply. The department's appeal is against this order.

3. The appeals (sic) straightaway concede that the issue in the appeals is not whether the fabrics is input as defined under law or not. The challenge to the Commissioner's order is on the other finding. If that is the case these appeals straightaway merit dismissal as in the facts that we have recorded, this was not the reason for denial of the credit proposed in the notice to show cause.

4. Even on this ground the law is settled in favour of the assessee. The Tribunal has clearly concluded that goods removed for purpose of export in terms of Rule 13 are not to be equated with goods removed under an exemption notification or at nil rate of duty. It is only in the latter category of cases that Rule 57C would apply. Reliance on the Tribunal decision in Dujodwala Resins and Terpenes Ltd. Vs. CCE, Chandigarh 1996 (14) RLT 650=1997 (93) ELT 451 and Gujarat Communications & Electronics Vs. CCE 1999 (108) ELT 744 is misplaced. These decisions were concerned with goods removed in terms of a notification under Rule 8 or Section 5A of the Act to which the provisions of Chapter X were made applicable. We are concerned with Notification 47/94 which is not a notification granting exemption, but is one giving effect to provisions of Rule 13. It is for this purpose that the procedure prescribed under Chapter X has been made applicable.

5. We therefore see no reason to interfere and dismiss these appeals.