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2015 (4) TMI 774 - CESTAT NEW DELHI

2015 (4) TMI 774 - CESTAT NEW DELHI - 2015 (329) E.L.T. 830 (Tri. - Del.) - Manufacturing activity or not - Crushing of fabrics - Marketability of product - Imposition of penalty - Held that:- Process of crushing results in permanent change in the fabrics and, hence, in view of Chapter Note 4 of the Chapter 55, this process would have to be treated as amounting to manufacture, as according to the Note 4 of the Chapter 55 in relation to the products of heading 5511, 5512, 5513 and 5514 the proces .....

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elves have accepted that the crush fabrics are saleable as such and are known in the market as crushed fabrics. Moreover there are number of internet websites of several manufacturers of crush fabrics which offer different verities of crushed fabrics for sale.

Extended period of limitation - Held that:- Since the dispute in this case pertains to interpretation, no malafide can be attached to non-payment of duty by the assessees on the crush fabrics being cleared by them. In view of t .....

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and R.K. Khanna, Authorized Representative (DRs) ORDER Per. Rakesh Kumar :- The facts leading to filing of these appeals are, in brief, as under. 1.1 M/s Dhanjjal Industries, Amritsar and M/s Guru Nanak Crushing, Amritsar are engaged in the process of crushing of manmade fabrics of sub-heading 551329 with the aid of power. In both the cases, the assessees were not paying any duty on the crushed fabrics being made by them. For the purpose of crushing, the fabrics are, first, put in the crushing m .....

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ocess of the appellant would amount to manufacture in view of Chapter Note 4 of Chapter 55 of the Central Excise Tariff according to which in relation to the products of adding 5511, 5512, 5513 and 5514, the process of bleaching, dyeing, printing, shrink briefing, stentering, heat setting, crease resistance processing or any other process or any one or more there processes shall amount to manufacture. According to the Department, the process of crushing with the aid of power is covered by the te .....

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being filed by M/s Dhanjjal Industries, Amritsar against the Additional Commissioners order, the Commissioner (Appeals) vide order-in-appeal dated 30th September, 2014 dismissed the appeals except for setting aside of penalty of ₹ 1,000/- imposed on the appellant under Rule 173Q of Central Excise Rules, 1944. He, however, upheld the entire duty demand alongwith interest thereon under Section 11AB and also the imposition of equal amount of penalty under Section 11AC. Against this order of t .....

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the assessee M/s Guru Nanak Crushing have filed the appeal No. E/108/2006, the Department has filed appeal No. E/2308/2005 against part of the order reducing the penalty under Section 11AC to ₹ 50,000/-. 2. Heard both the sides. 3. Ms. Priyanka Goel, Advocate, the learned Counsel for M/s Dhanjjal Industries and Ms. Surabhi Sinha, the learned Counsel for M/s Guru Nanak Crushing, pleaded that the crushing of fabric does not result in permanent changes in the fabrics, that the Apex court in .....

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a change of lasting character to the fabric either by chemical changes into the fabric or otherwise, that the process of crushing does not bring any change of lasting nature to the fabric as the wrinkles introduced by the process of crushing disappear after washing and ironing and that in any case, the crushed fabrics are subjected to further processing and in the form in which the same are cleared by the assessees in these appeals, the same cannot be said to be marketable and, hence, for this .....

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tled law that burden of proof of marketability is on the Department, while in this case no evidence in this regard has been produced and that in view of this, the impugned order upholding the duty demand on the crushed fabrics being made by the assesses by holding the process as amounting to manufacture is not sustainable and hence there is no question of imposition of penalty on them. 4. Shri Ranjan Khanna and Shri M.S. Negi, the learned DRs, defended the impugned orders by reiterating the find .....

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lt machine gets permanency of the crushed effect obtained in the crushing machine, that crushing of the fabrics gives a particular type of effect to the fabric which is permanent, and therefore, the process of subjecting the grey fabrics to crushing would amount to manufacture, that the crushed fabrics have market and, hence, the fabrics subjected to the process of crushing would be excisable goods attracting Central Excise duty, that since in both the cases, the assessees have neither obtained .....

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ed in 2008 (231) E.L.T. 3 (S.C.), once the provisions of Section 11AC are held to be applicable, penalty equal to the duty demand confirmed has to be imposed and the Adjudicating Authority has no discretion to impose a lower penalty and, hence, the order passed by the Commissioner (Appeals) in the case of M/s Guru Nanak Crushing reducing the penalty to ₹ 50,000/- is not correct. 5. We have considered the submissions from both the sides and perused the records. 6. The main point of dispute .....

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e undone on washing. These facts are not disputed by the assessees and in both the cases, the assessees have accepted that the crush fabrics, as such, are sold. In view of this, it has to be held that the process of crushing results in permanent change in the fabrics and, hence, in view of Chapter Note 4 of the Chapter 55, this process would have to be treated as amounting to manufacture, as according to the Note 4 of the Chapter 55 in relation to the products of heading 5511, 5512, 5513 and 551 .....

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