The Customs Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad held a demand to pay NNCD for Partially Oriented Yarn under proviso to Section 11AC not sustainable for an entire period beyond one year.
The appellant, Maheshwari Texturisers Limited is engaged in the manufacture of excisable goods namely Polyester Texturised Yarn (crimped yarn) falling under Chapter 5402 of the Central Excise Tariff Act, 1985. For the manufacture of texturised yarn, the appellant procured polyester chips falling and Chapter heading 39 and they sent it to job workers for the manufacture of intermediate goods namely Partially Oriented Yarn falling under Chapter 54.02. After receipt from the job workers, the same is used captively for the manufacture of their final product namely Polyester Texturised Yarn.
The case of the department is that the appellant is required to pay National Calamity Contingent Duty (NCCD) in respect of POY falling under Chapter 5402 used captively, on the ground that Notification No. 67/95-CE dated 16.03.1995 does not exempt from payment of NCCD. Accordingly, the duty demand of NCCD of Rs. 2,22,741/- along with interest an equal amount of interest has been confirmed. The same was upheld by the learned Commissioner (Appeals), therefore the present appeal is filed by the appellant.
The Bench consisting of Ramesh Nair, Judicial Member, and Raju, Technical Member held that “the issue involved is of levy of NCCD in respect of Partially Oriented Yarn falling under Chapter 5402 consumed captively for the manufacture of Polyester Texturised Yarn. The issue involved is a neat question of law which involved the interpretation of exemption provided in respect of NCCD. It is also a fact on record that the appellant has declared their manufacturing process to the department and they were filing ER-1 returns regularly.
In respect of the entire demand which is for the period from 01.07.2003 to 31.07.2004, the show cause notice was issued on 31.07.2008. The entire period is beyond one year, hence the demand under the proviso to Section 11AC is not sustainable. Accordingly, the demand is hit by limitation hence the impugned order is set-aside.”
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