The New Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in the case of M/s Parasrampuria International v. CCE Indore held that the value of cotton waste is exempted from duty and shall be excluded for DTA sales entitlement.
Appellant, M/s. Parasrampuria International is a 100% EOU engaged in the manufacture of Polyester Cotton yarn and Polyester blended yarn falling under sub-heading no.5505.10, 5515.20, 5202.10, 5202.99, 5509.21 and 5509.22 of the Central Excise Tariff for export. The appellant during this period, in addition to clearing the finished products, ‘spun yarn’ for export, were also making DTA clearances of cotton waste. The Director General of Central Excise Intelligence investigated that the value and quantity of the DTA clearances had been under-declared.
The appellant approached the Settlement Commission which settled the dispute. Accordingly, the appellant paid differential duty amounting to Rs.1,28,22,150/- along with simple interest @ 10%. The relevant notification No.23/2003 dated 31.03.2003 allowed the benefit of the concessional rate for DTA clearances only for the goods which were cleared in DTA in accordance with the Exim Policy restricted to overall the ceiling of such DTA clearances to 50% of the FOB value of exports. The Revenue added the quantum of under-valuation of cotton yarn, as settled by the Settlement Commission, to the value of clearances already made during the disputed period and noticed that over the ceiling of 50% of the FOB value was already breached. For the value of clearances in excess of the ceiling, the Revenue demanded the differential duty without the benefit of the concession under Notification No.23/2003, totally amounting to Rs.4.37 lakhs.
The issue before the present tribunal was that whether the value of cotton waste which stands exempted from duty is required to be counted for DTA sales entitlement.
The revenue contended relying upon various case laws that the Commissioner has erred in taking the view that the cotton waste was non-excisable and further submitted that sale of rejects shall be counted under DTA sale entitlement as per the Exim Policy.
The assessee, however, argued that the issue regarding DTA sales entitlement has been decided in the recent case whereby the Tribunal held that the Tribunal held that the value of cotton waste which stands exempted from duty is not required to be counted for DTA sales entitlement. Accordingly, he submitted that the Revenue appeal is without merit.
After hearing both the parties, keeping into consideration the cases cited by both the parties, the Tribunal was of the view that obtaining soft cotton waste in the course of carding and combing, ginning cotton do not amount to manufacture and no news product with the distinct name, usage and character emerges. Furthermore, that cotton waste is exempted under Notification No.23/2003-C.E. without any condition. Even if the respondents have no permission for DTA sales in terms of Exim Policy, such waste cannot be subjected to any duty. The applicable duty on such cotton waste is nil without any condition.
Hence, the Tribunal rejected the appeal filed by revenue.
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