TMI Blog2010 (1) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel, for the Appellant. Ms. Paresh M. Dave ,Advocate, for the respondent. [Order per : K.A. Puj, J.(Oral)]. - The Deputy Commissioner of Customs, Kandla Special Economic Zone, Gandhidham -Kachchh has filed this Tax Appeal under Section 130 of the Customs Act, 1962 proposing to formulate certain questions of law for determination and consideration of this Court. The questions reframed at the time of hearing of this appeal are as under :- Tax Appeal No.722 of 2006 A. Whether or not the activity of cellophaning products of foreign origin manufactured, marked and lebeled as per requirements of their country would amount to -manufacture- within the meaning of Section 2 (f) of the Central Excise Act, 1944 read with Notification No.133/94-Customs dated 22.06.1994 and would be entitled to exemption under Notification No.02/95-Central Excise dated 04.01.1995 ? B. Whether or not the Commissioner of Customs is entitled to demand duty short paid while denying the benefit of Notification No.02/95 dated 04.01.1995 on a finding that the activity undertaken by importer for clearance of goods in DTA does not amount to manufacture where it is clarified in Notification No. C-32/40/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944 cannot be upheld ? (D) Whether the Tribunal, in the facts and circumstances of the present case, is justified in holding that the total duty demand as worked out on the invoice values of sales to Domestic Tariff Area (DTA) cannot be upheld despite considering the demand as under Customs Act and whether the Tribunal is justified in holding that the respondent is not liable to pay Customs and Central Excise Duty despite they being not eligible for the benefit of Notification No.133/1944-CUS dated 22.6.1944 as amended ? (E) Whether the Tribunal, in the facts and circumstances of the present case, is justified in granting benefit of Notification No.02/95-CE to the respondent ?" 2. Heard Ms. Amee Yajnik, learned Standing Counsel appearing for the Revenue and Mr. Paresh M. Dave, learned advocate appearing on Caveat for the respondent-assessee. 3. For the sake of convenience facts are taken from Tax Appeal No.722 of 2006. The brief facts giving rise to the present tax appeal are that the respondent assessee is an Unit established in Kandla Special Economic Zone earlier known as Kandla Free Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cus dated 2.6.1994 and the goods are leviable to duty at the full rate of 40% + CUD 50% under the Medicinal and Toilet preparations (Excise Duty) Act, 1955 and recovery of duty amounting to Rs.60,41,095/- under Section 11A of the Central Excise Act, 1944 and the recovery of interest under Section 11AA of the Central Excise Act, 1944 and confiscation of goods under Rule 173Q (b) read with Rule 209 of the Central Excise Rules, 1944 and imposition of penalty under Section 11AC of Central Excise Act, 1944. 6. The said show-cause notice was adjudicated by the Commissioner of Customs, Kandla who vide his order in original dated 04.12.2000 denied the benefit of Notification No.2/95-CE dated 04.01.1995 on the ground that the processes carried out by the respondent did not amount to manufacture and confirmed the duty and imposed penalty on the respondent. 7. Being aggrieved by the order of the Commissioner, the respondent preferred Appeal before CESTAT, Mumbai which came to be decided on 30.05.2005 in favour of the respondent assessee by setting aside the order of the Commissioner. 8. It is this order of the Tribunal which is under challenge in the present tax appeal. 9. Ms. Yajni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f) of Central Excise Act, 1944. If the process undertaken by the respondent is not considered to be a manufacturing activity, as a natural corollary, the respondent is not entitled to the exemption of the notification. 11. Mr. Paresh M. Dave, learned advocate appearing for the respondent assessee, on the other hand, has strongly supported the order passed by the Tribunal. He has submitted that the Tribunal has enumerated different processes undertaken by the respondent under three different heads A, B C and arrived at the conclusion that various processes undertaken by the respondent are covered by the concept of manufacture. All manufacturing activity cannot be judged with reference to Section 2 (f) of the Act. As a matter of fact, the Central Board of Indirect Taxes vide its order / circular has directed the field staff that broader view is called for in respect of the interpretation of the provisions of notification No.1/95-CE. There is no such provision that if there is no manufacture under the Central Excise Act, duty of customs is a foregone conclusion. The demand under the Central Excise Act cannot be confirmed as the goods were removed to Domestic Tariff Area are manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly co-related to the duty demands determined in such cases under Central Excise Act, 1944 where the ingredients of Proviso to Section 11 A (1) are involved and established. The Tribunal further observed that there is no demand raised in the show-cause notice under the Customs Act, 1962. The order of the Commissioner demanding the duty and interest under the provisions of Customs Act, 1962 without specifying the same as to under which provision such demand is raised would certainly travel beyond the show-cause notice. It is, therefore, bad in law. The Tribunal has also considered the fact that the respondent is in a Free Trade Zone and hence, at the material time, it was covered by the provisions of Chapter VA of the Central Excise Rules. Units covered by Chapter V A of the Central Excise Rules were not covered by the Rules of Chapter VII A of the 1944 Rules vide Rule 173 A (2). Rule 173Q is under Chapter VII A of the 1944 Rules. Hence, penalty under Rule 173Q on the respondent is also invalid. 14. Considering the reasoning adopted by the Tribunal in its order while reversing the order of the Commissioner and allowing the appeal, by formulating substantial questions of law for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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