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TMI Blog2013 (9) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... jute backed floor coverings are assessable to duty under sub-heading No. 5703.20 of Central Excise Tariff Act, 1985 and attract 'Nil' rate of duty. Fifteen show-cause notices were issued to the appellants for the period October, 1991 to October, 2002. The allegation raised in the show-cause notices was that the "non-woven fabric" which had emerged as an intermediate product during the course of manufacture of the jute carpet was a marketable product classifiable under Heading 56.03 and hence duty was leviable thereon inasmuch as the final product was exempt from payment of duty. The appellants denied this allegation and maintained that the so-called "non-woven fabric" was neither marketed nor marketable. They claimed that the goods sold by them as "non-woven fabric" on payment of duty during the period of dispute were different from the intermediate product referred to in the show-cause notices. The appellants accordingly contested the demand of duty on the ground that the marketability of the item in question had not been established by the Revenue through positive evidence. The show-cause notices were adjudicated by the Commissioner of Central Excise, Raigad vide Order-in-Origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the show-cause notices. He submitted that department has re-quantified the duty for the period November, 2002 to December, 2004 on the basis of assessable value determined @115% of the cost of production of Rs. 15.12 psm which works out to Rs. 17.39 psm for the period November, 2002 to July, 2003 and @110% of the cost of Rs. 15.12 psm which comes to Rs. 16.63 psm for the period August, 2003 to December, 2004 and this method of valuation was confirmed by Assistant Commissioner as well as the Commissioner (Appeals). He therefore, submitted that the learned Commissioner should have also re-determined the duty demand on the basis of the cost of production plus notional profit for the period prior to November, 2002. The learned Advocate submitted that appellant has also challenged the quantification of duty on quantity mentioned in the show cause notices which is also not considered by the learned Commissioner. He submitted that quantity of disputed goods can not exceed the quantity of jute carpet manufactured. Department has demanded the duty in last 8 show-cause notices on 10,45,712.03 square meter, though quantity of jute carpet manufacture is as 1,69,504.96 square meter. He furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in a roll form. I Passage : This roll is fed to the Finish Needle Loom in which Needling process is continued and again delivered into a roll form. II Passage : Fibre roll is punched with 7 oz jute again on Finished Needle, Loom and wound in a roll form. Roll after II passage is back-coated with the binder to produce a final product called Jute Backed Floor Covering. As it emerges from above, the web of PP fibres is put to a process called pre-needling after which it acquires sonic type of dimensional stability as fibres get entangled at the point where needle has gone inside the web. This pre-needled web in roll form is now led to the finished needling loom and this finished needled product in roll form is then further used for manufacture of jute backed carpets." 9. We find that Shri Patwardhan, General Manager has also submitted an affidavit dated 7-11-2008. Paras 7, 8, 12 and 13 of affidavit which are relevant to present proceedings are also reproduced below :- "(7) In the first step, the polyester fibres bales are opened and mixed. This process called Blending. In the second step, the fibres are arranged in the form of laps/webs in a machine called Carding. In the thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... informed that appellants vide letter dated 28-2-2011 have stated that regarding process undertaken to bring dimensional stability in the "non-woven fabrics" manufactured and used captively, the "non-woven fabrics" also undergo pre-needled and then finished needle process. On the basis of process of manufacture, affidavit of Shri Patwardhan and report of Assistant Commissioner of Central Excise, Commissioner held that impugned goods are capable of being marketed and are therefore excisable. We note that as per Fairchild Dictionary of Textiles, the word 'dimensional stability' means ability of fabrics to retain its shape and size after being worn, washed and/or dry cleaned, the stability is governed by fibre content and by chemical and mechanical treatments. We also note that Shri Patwardhan in his affidavit (Para 13) has stated that compactness/tensile strength/dimensional stability of impugned goods is not comparable and is totally different from tensile strength/compactness/dimensional stability of "non-woven fabrics" cleared by them. We also find from affidavit (Para 8) Compactness/tensile strength increases by 15 to 40% after second pass vis-a-vis the first pass. There is no di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by them. 13. Appellant's contention that no penalty is imposable on them as show-cause notices invoking extended period of limitation has been dropped. Appellant's contention is that as there was no suppression of fact, misdeclaration on their part they are not liable to any penalty. Commissioner has taken a view that appellants have with held the fact that impugned goods have dimensional stability which is sole criterion to be tested for marketability of impugned goods in view of direction of CESTAT. This view of the Commissioner is not correct in as much as CESTAT has not given any such direction. In fact CESTAT in its order dated 28-4-2010 in para 12 has clearly stated that "learned Commissioner shall not be influenced by any observation of ours, in this order on the substantial issue under remand." We are of the view that since duty amount is to be re-determined by the Commissioner on account of valuation as well as quantity of fabrics, imposition of penalty will depend on the duty re-determined. Commissioner will consider the imposition of penalty afresh after re-determination of duty. 14. In view of above, we hold :- (i) Duty on impugned goods used captively is leviable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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