Full Judgment
The said demand has been confirmed against the appellant by denying them the benefit of exemption notification no. 14/2000 (Sr. No. 12) which grants exemption to knitted or crocheted fabrics of cotton, subject to any process, subject to the fulfilment of the condition 3 is to the notification. Condition no. 3 to the following effect: "3. If made from knitted or crocheted textile fabrics of cotton, whether or not processed, on which the appropriate duty of excise leviable under the First Schedule to the said Central Excise Tariff Act and the Additional Duties of Excise (Goods of Special Importance) Act, read with any notification for the time being in force, or the additional duty of customs leviable under section 3 of the Customs Tariff Act, 1975, as the case may be, has been paid and no credit of the duty paid on inputs or capital goods has been taken under rule 3 or rule 11 of the CENVAT Credit Rules, 2002." 2. The revenue's contention is that since the grey knitted fabrics has availed to benefit of the same notification, it is to be treated as if no duty has been paid on the same and the condition is not fulfilled.
On the other hand, the appellant's contention is that they have paid duty on the yarn and fibres which are the basic inputs as such benefit would be availed to them. Shri M.H. Patil, Advocate, submits that a reading of the said condition makes it clear that inputs should have paid the appropriate duty of excise, read with any notification for the time being in force. As such, even if the grey fabrics has been cleared under the notification, the same is to be considered as if appropriate duty has been paid on the same. Reference has also been made to the Boards Circular that in such case the benefit of notification should not be denied to the processed fabrics. After hearing ld. JDR, Shri.
R.B. Pardesi, we are of the view that the appellants have been able to make out, prima facie, case in his favour, and allow the stay petition unconditionally.