TMI Blog1993 (3) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... ent recorded from Shri S.A. Kwatara, in which he said that they were using power for hydro extraction and also stated that the fabrics seized were not entered in their accounts. The Department found that the use of power for hydro extraction will dis-entitle the appellants from availing of the partial exemption under Notification 79/82 as they are carrying out other processes also. The appellants have been using power in this process from 1978 which the Department found had not been disclosed to them. Proceedings were initiated by the issue of Show Cause Notice dated 13-11-1984 for having suppressed the fact regarding use of power for hydro extraction for having removed the fabrics without filing a proper classification list and payment of duty thereon as also for the non-accountal in the R.G. 1 Register of 656.00 L. Mtrs. of man-made fabrics found in factory premises in fully marketable condition on 4-7-1984 contravening Rule 173G(4) read with Rules 53 and 226. On considering the evidence of the appellants and hearing them in the matter, the Collector passed the impugned order in which he rejected their arguments that use of power for hydro extraction will not dis-entitle them to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also been visited by the departmental officers, who have verified their accounts, m such a context, the ld. Counsel urged that the appellants cannot be charged of having suppressed the material fact from the department he relied upon the case of Collector of Central Excise v. Chemphar Drugs 6 Liniments -1989 (40) E.L.T. 276 (S.C.) to say that mere inaction on the part of the manufacturer is not sufficient for invoking a longer period under Section 11A of Central Excises Salt Act but something positive of withholding of information knowingly from the Department has to be established. There was no such case here of such deliberate withholding of information. He, further, relied upon the Supreme Court decision in the case of Pad-mini Products v. Collector of Central Excise - 1989 (43) E.L.T. 195 to say that where there is scope for doubt whether goods are dutiable, the longer period cannot be invoked alleging suppression of fact. In the present case, the appellants believed that hydro extraction with the aid of power in the dyeing of fabrics would not disentitle them for exemption. He also relied upon the Tribunal s decision in the case of Synthetic Chemicals v. Collector of Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re manufactured without the aid of power at any stage of the process where manufacturing involves series of processes and if any one of such processes is carried on with the aid of power, the Supreme Court held that the case is taken out of the purview of such notification. In the present case there is use of power at one of the stages in hydro extraction before further processes of stentering and curing is applied. Therefore, the exemption in the notification is not applicable. The ld. SDR, further, pointed out that under Section 2(f) of the Central Excises Salt Act, 1944, stentering is a process of manufacture by definition. The ld. SDR also pointed out the reasoning by the Collector wherein he has distinguished factual situation of the appellants with reference to their processes. On the question of limitation the ld. SDR contended that the appellants correspondence with the department would clearly show that they were aware of the facts that if power is used, they will not be entitled to the exemption. It was not disclosed to the department during the period 1978 to 1983 that they were using power for hydro extraction and even the ground plan had been submitted only showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arried on with the aid of power and, therefore, mere transfer of raw materials by the use of power cannot be considered as a process of manufacture. The Central Government has exempted all goods falling under Item No. 68 of the First Schedule to the Act in or in relation to the manufacture of which no process is ordinarily carried on with the aid of power from the whole of the duty of excise leviable thereon. The exemption under this notification is available only when the goods are manufactured without the aid of power at any stage of the process. Where manufacture involves series of processes and if anyone of such processes is carried on with the aid of power, the case is taken out of the purview of the notification. Thus processing may be an intermediate stage in manufacture and until some change has taken place and the commodity retains a continuing substantial identity through the processing stage, we cannot say that it has been manufactured. That does not, however, mean that any operation in the course of such process is not in relation to the manufacture. While interpreting the same exemption notification in Standard Fireworks Industries v. Collector, 1987 (28) E.L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove one of them which would indicate that in respect of one of the hydro extraction machine, it cannot be said that it was proposed. This ground plan had been duly verified and approved. Further, the unit had been visited by the Audit Party in 1982 headed by the Supdt. (Audit) and there had also been a visit by the Supdt. (Preventive Intelligence) on 31-7-1980. The preventive and intelligence and audit parties visit could have subjected the factual situation of the appellants to a more thorough scrutiny than even the mere routine visits and scrutiny of records of the appellants by the jurisdictional Superintendent or the Range Inspector which were more frequent during the period. There is also an indication in the appellants reply to the show cause notice, which has also been recorded in the adjudication order that a number of processors have been issued with show cause notice in respect of hydro extraction by use of power which they relied upon for showing that there was no suppression of fact, but only change in the view held by the department. Another aspect in this context, which would have to be given due consideration and which would support the plea of the appellants th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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