By TIOL News Service

MUMBAI, DEC 05, 2012: THE applicants are engaged in the manufacture of Jute backed Floor Coverings which are exempted from the payment of duty.

The case of the Revenue is that the applicants were manufacturing an intermediate product viz. Non-woven fabric and apart from consuming the same in the manufacture of exempted Floor Covering were also clearing the same in the market.

A total Central Excise duty demand of Rs.1,62,33,344/- was raised under various SCNs in respect of intermediate product i.e. Non-woven fabric captively consumed.

As the CCE, Raigad confirmed the same along with imposition of penalty and interest, the applicant is before the CESTAT.

It is submitted that -

+ non-woven fabric which is cleared in market is different from the fabric which is captively consumed and the same is not marketable as such, hence it is not excisable.

+ in paragraph 20 of the order, the adjudicating authority has held that the difference between the impugned goods and the goods sold as non-woven fabric is the enhanced dimensional stability of the sold goods vis-à-vis the intermediate product.

+ there is no evidence produced by the Revenue to show that the non-woven fabric which is captively consumed is marketable.

+ the present order is passed in remand proceedings inasmuch as against the earlier order-in-original they had preferred an appeal before the Tribunal and the Bench had after waiving the pre-deposit heard the appeal on merit and dismissed the same; in further appeal the Bombay High had remanded the matter to the Tribunal and the Tribunal had further remanded the matter to the adjudicating authority.

+ In these circumstances, as earlier appeal was heard without asking for any pre-deposit the present appeal be also heard without insisting for the same.

The Revenue representative reiterated the findings of the adjudicating authority.

The Bench observed -

"6. We find that in para 20 of the impugned order, the adjudicating authority held that the non-woven fabric which is sold has enhanced dimensional stability. Here, the fabric is captively consumed. As per the Fairchild's Dictionary of Textiles, the word ‘dimensional stability' means ability of a fabric to retain its shape and size after being worn, washed, and/or dry cleaned, the stability is governed by fiber content and by chemical and mechanical treatments. As the goods captively consumed and sold in the market having different dimensional stability, the applicant has made out a prima facie strong case for waiver of pre-deposit. Accordingly, we waive the requirement of pre-deposit for hearing the appeal and stay recovery thereof during pendency of the appeal. Stay petition is allowed."

Noting that the demand pertains to the period from 1991 to 2002 and the duty amount is more than Rs.1 crore, the Registry was directed to list the appeal for final hearing on 6.11.2012.

We will keep you posted…

(See 2012-TIOL-1776-CESTAT-MUM)