The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the Nill Rate of Additional Excise Duty (AED) applicable on Yarn for the Date of Clearance due to the withdrawal of levy and set aside the demand of excise duty.
Emtee Poly Yarn Pvt Ltd, the appellants were in the year 2004 manufacturing Yarn which was subjected to Additional Excise Duty under Additional Duties Of Excise (Textiles And Textile Articles) Act, 1978 Vide Notification No. 31/2004-CE dated 09.07.2004 such additional duty of textile was done away with.
The department however, with a viewpoint that the date of manufacture of goods is decisive in the determination of levy in case of Excise Duty or for that matter, additional Excise Duty demanded the same on Yarn cleared by the appellants produced before cut off date of 09.07.2004 but cleared after the date of withdrawal of additional duty of excise on stock which was available before the cut off date.
Both the lower authorities upheld the demand relying upon the decision in the matter of Collector Of Central Excise Hyderabad Vs. Vazir Sultan Tonacco Co. Ltd. in which it was held that even if goods were manufactured before the date of the same becoming dutiable, but were cleared later, the same become subject to levy of duty from the date of the levy and such goods shall not be leviable to Excise Duty if produced earlier.
The Supreme Court also while analysing the relevant provisions held that “erstwhile Rule 9 of the Central Excise Rules, 1944 refers to the removal of “excisable goods” and not of “goods”, therefore, the goods per se must be excisable first before being subjected to levy of Excise duty before their removal.”
The CESTAT bench of Mr. Somesh Arora, Member (Judicial) held that the impugned goods i.e. Yarn in this instance were taxable as on the date they were manufactured as levy was subsisting. On the date of clearance, on withdrawal of levy, the applicable rate of A.E.D had become “Nil”. Therefore, on the date of clearance “Nil” rate of A.E.D. shall be applied to the goods cleared.
While allowing the appeal, the Tribunal held that the demand was not sustained.
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