Venus Polytex Pvt. Ltd. Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. this stay application has been filed with reference to the order of the commissioner (appeals), new delhi dated 19-9-1997.2. ld. counsel stated that the appellants are manufacturers of hdpe/pp fabrics and sacks. they were availing modvat credit during 1992-93, but w.e.f. 1-4-1993, they opted out of it and claimed exemption on clearances of rs. 30 lakh during the period 1993-94.3. during this period they had semi-processed material in the form of semi-finished fabric which was sent out for job work and received back in the factory. they utilised it for captive consumption for manufacture of the finished products, which were duly cleared on gate passes. the value thereof was within the limit prescribed in the notification 1/93. they availed the benefit thereof. however a show cause notice was issued on 3-3-1994 asking them to pay duty on the value of the goods sent for job work is on the ground that by inclusion thereof, prescribed limit was exceeded.4. it was their contention that the department has wrongly denied the benefit of notification no. 1/93, dated 28-2-1983. this notification has an explanation vi and in terms of this explanation where any inputs which are specified goods are used for further manufacture of specified goods within the factory of production of goods, clearance of such goods for job work shall not be taken into account for the purpose of calculating the aggregate value of clearances. hence, the value of the semi-finished material sent out for job work and received back was not required to be taken into consideration. and if it is so done, it will be seen that the prescribed limit has not been exceeded and there is no dispute in this respect.5. further, the assistant collector has also referred to a permission requested for under rule 57f(2), but refused. in this connection, it was his submission that the permission was asked under a mistaken belief and in fact it was not required under the rules. therefore, that refusal should not come in the way of their availment of benefit.6. it was also their submission that the demand was time barred having been issued after the normal period of limitation in so far as clearance of semi-finished goods for job work was concerned. further, during the period, specified goods manufactured on job work were exempt in terms of notification 214/86, dated 25-3-1986.7. in response to a query from the bench, the ld. counsel clarified that reference to the period 1992-93, during which they were operating under modvat scheme was not called for as the entire case relates only to the period 1993-94.8. he, further clarified that he is not pressing at this stage the question of valuation for the purpose of assessment.9. he submitted that they were entitled for the benefit under notification as such value of the finished goods has not crossed the limit.10. ld. dr draws our attention towards the o/a and reiterates the department's view.11. we have considered the above submissions. prima facie the appellants have a strong case. looking to the totality of the facts and circumstances, we feel that prayer for waiver of pre-deposit is justified. we, therefore, grant the request and stay the recovery of the amount in question during the pendency of the appeal.

Judgment:
1. This stay application has been filed with reference to the order of the Commissioner (Appeals), New Delhi dated 19-9-1997.

2. Ld. Counsel stated that the appellants are manufacturers of HDPE/PP fabrics and sacks. They were availing Modvat credit during 1992-93, but w.e.f. 1-4-1993, they opted out of it and claimed exemption on clearances of Rs. 30 lakh during the period 1993-94.

3. During this period they had semi-processed material in the form of semi-finished fabric which was sent out for job work and received back in the factory. They utilised it for captive consumption for manufacture of the finished products, which were duly cleared on gate passes. The value thereof was within the limit prescribed in the Notification 1/93. They availed the benefit thereof. However a show cause notice was issued on 3-3-1994 asking them to pay duty on the value of the goods sent for job work is on the ground that by inclusion thereof, prescribed limit was exceeded.

4. It was their contention that the department has wrongly denied the benefit of Notification No. 1/93, dated 28-2-1983. This notification has an Explanation VI and in terms of this Explanation where any inputs which are specified goods are used for further manufacture of specified goods within the factory of production of goods, clearance of such goods for job work shall not be taken into account for the purpose of calculating the aggregate value of clearances. Hence, the value of the semi-finished material sent out for job work and received back was not required to be taken into consideration. And if it is so done, it will be seen that the prescribed limit has not been exceeded and there is no dispute in this respect.

5. Further, the Assistant Collector has also referred to a permission requested for under Rule 57F(2), but refused. In this connection, it was his submission that the permission was asked under a mistaken belief and in fact it was not required under the rules. Therefore, that refusal should not come in the way of their availment of benefit.

6. It was also their submission that the demand was time barred having been issued after the normal period of limitation in so far as clearance of semi-finished goods for job work was concerned. Further, during the period, specified goods manufactured on job work were exempt in terms of Notification 214/86, dated 25-3-1986.

7. In response to a query from the Bench, the ld. Counsel clarified that reference to the period 1992-93, during which they were operating under Modvat scheme was not called for as the entire case relates only to the period 1993-94.

8. He, further clarified that he is not pressing at this stage the question of valuation for the purpose of assessment.

9. He submitted that they were entitled for the benefit under notification as such value of the finished goods has not crossed the limit.

10. Ld. DR draws our attention towards the O/A and reiterates the department's view.

11. We have considered the above submissions. Prima facie the appellants have a strong case. Looking to the totality of the facts and circumstances, we feel that prayer for waiver of pre-deposit is justified. We, therefore, grant the request and stay the recovery of the amount in question during the pendency of the appeal.