The Division Bench of the Supreme Court today disallowed the claim of manufactures of certain products of yarn and held that excise duty can be levied on such products. The Court, on an appeal filed by the manufactures, was considering the issue i.e, whether the goods cleared by the appellant were eligible for exemption under Notification No. 125/84 dated 26.05.1984.
The appellants in the instant case are engaged in the manufacture of excisable goods, namely, synthetic yarn and in trading of Polyester Textured/Twisted Dyed Yarn. The appellants had procured partially oriented yarn (POY) falling under Chapter 54 without payment of duty for the manufacture of various types of yarn, namely, polyester texturized yarn, nylon covered yarn, and polyester covered yarn.
The Commissioner of Central excise passed an order against the assessee to the effect that the goods valued at Rs.1,72,186/- must be confiscated (ii) Rs.55,202.96 must be paid by the assessee as differential duty on the confiscated goods which were released provisionally before the Adjudication (iii) the assessee is liable to pay an amount of Rs.32,92,854/- as duty and, (iv) ordered recovery of interest under Section 11AB and imposed a penalty of Rs.33,48,060/- on the appellants.
Being aggrieved by the aforesaid order, the appellant preferred appeals before the Customs, Excise and Service Tax Appellate Tribunal in which both the appellate bodies confirmed the impugned order. However, the Tribunal granted some relief to the appellants by relaxing the penalties imposed on them.
The appellant again filed an appeal before the High Court. The High Court noted the submissions of the learned counsel for the writ petitioners and opined that keeping in view the concept of self-restraint and the requirement of judicial propriety, it was desirable for the whether the goods cleared by the appellant were eligible for exemption under Notification No. 125/84 dated 26.05.1984.assessee to prefer an appeal before the Supreme Court. Being of this view, the High Court declined to interfere. Therefore, the matter was brought before the Supreme Court.
The stand of the assessee is that it was eligible to clear goods up to a certain specified limit after obtaining due permission from the Development Commissioner in terms of Export-Import (EXIM) Policy read with Handbook of Procedure (HBP). It was contended that even if it is held that finished goods were removed by the assessee without requisite permission from the
Development Commissioner, central excise duty is leviable in terms of Section 3(1) of the Act.
The Department, while opposing the above averments, contended that contend that the appellant which is a continuing EOU, was bound to export finished goods and as there has been non-fulfilment of the obligation and the goods have been cleared without permission of the competent authority, the appellants are liable to pay the duty as determined by the tribunal. It is their further argument that the assessee cannot be assessed under Section 3(1) of the Act but under the proviso as held by the tribunal.
The Court while allowing the appeal set aside the impugned order and held that the assessee shall be liable to pay the excise duty as per Section 3(1) of the Central Excise Act. The competent authority is directed to compute the duty accordingly and proceed thereafter as per law. In the facts and circumstances of the case, there shall be no order as to costs.
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