Clearance of Grey Fabrics by Complying Conditions of Rule 20 of Central Excise Rules: CESTAT quashes Excise Duty Demand [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the demand for Central Excise Duty imposed on clandestinely cleared dyed grey fabrics illicitly removed on the ground of complying with the conditions of Rule 20 of the Central Excise Rules,2002. 

Quality Technocast Private Limited, the appellant assessee was a 100% Export Oriented Unit and engaged in the manufacture of Polyester grey fabrics falling under Chapter 54 of Schedule to the Central Excise Tariff Act,1985. 

The assessee appealed against the order passed by the Commissioner, Central Excise, Customs Service Tax for confirming the Excise Duty demand and confiscation of goods valued at Rs. 2,89,72,080/- was also proposed under Rule 25 of the Central Excise Rules and Section 111(j) and 111(o) of the Customs Act, 1962. 

Hardik Modh, the counsel for the assessee contended that the circular issued by the Central Board of Excise & Customs wherein provides that if the re-warehousing certificate was not received, the liability of duty can be fastened upon the Consignor and the action of the department not following the circular issued by the board was considered a violation of the principle of judicial discipline. 

Further submitted that the assessee complied with all the conditions of Rule 20 of the Central Excise Rules and Regulations and therefore demand for Central Excise Duty raised by the department was not sustainable. 

Kalpesh P. Shah, the counsel for the department relied on the decisions made by the lower authorities and contended that the procedures and conditions as provided under Notification of Chapter 10 of supplementary instruction and Rule 20 of the Central Excise Rules were not followed by the assessee. 

The Bench observed that the revenue had made a demand for central excise duty on goods consumed in the finished goods and on the other hand, it was demanding duty on the finished goods which was wrong and the conditions of Rule 20 of Central Excise Rules were complied by the assessee. 

The two-member bench comprising Ramesh Nair (Judicial) and C.L Mahar (Technical)quashed the impugned order and remanded the matter to the Adjudicating Authority to decide the matter afresh after affording an opportunity of personal hearing to the assessee. 

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates