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2017 (2) TMI 619 - CESTAT MUMBAI

2017 (2) TMI 619 - CESTAT MUMBAI - TMI - Considering separate premises as single factory - Why the parties grouped against each serial number should not be regarded as constituting the same factory for the purpose of Notification No. 253/82 (earlier Notification No. 80/76) by the virtue of the facts that one unit is power operated and other is non power operated unit? - Held that: - the issue involved in the present appeals have already been settled in this Tribunalís judgment reported as Commis .....

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different premises where these activities are undertaken will therefore render these premises one factory, then no one will be able to comply with the proviso to N/N. 253/82-C.E. and Notification will be rendered nugatory. All the units under reference are separate factories and are not the precincts nor the part of the same premises - The various factors such as common management common administration, common sharing of water, job work transactions amongst them, close relationship amongst the p .....

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R.) for Appellant Shri N.S. Patel, Advocate for respondent Per: Ramesh Nair The COD application is on the ground that initially a common appeal was filed in time however as per the Tribunal s opinion individual appeals are required to be filed therefore these individual appeals were filed which were delayed. Considering the reason for delay, we allow the COD applications. 2. In the show cause notice various groups of parties have been asked to show cause why the parties grouped against each seri .....

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h serial number constitute a single manufacturing unit i.e. the same factory for the purpose of C. Ex and Salt Act, 1944. The concerned units should therefore immediately apply for a licence/amendment of the licence as the case may be, under Rule 174, in respect of the entire premises of the power operated unit and the corresponding non power operated unit mentioned against each serial number of the order. If any of the parties at S.No.1 to 16 fails to do so within 10 days of the receipt of this .....

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he demand of extended period was set aside. The present appeals are one of the left over appeals filed by the Revenue. 3. Shri N.S. Patel, Ld. Counsel for the respondents submits that the issue involved in the present appeals have already been settled in this Tribunal s judgment reported as Commissioner of Cus. & C. Ex., Pune Vs. Swastik Dyeing & Bleaching Factory 2004 (170) E.L.T. 491 (Tri.-Mumbai) whereby the parties appeals on merit have been allowed and Revenue s appeals on limitatio .....

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als are offshoot of the common impugned order passed in respect of various parties. All the appeals of the parties have been allowed and the Revenue s appeals challenging setting aside the of demand for extended period were dismissed. The relevant para of the judgment is reproduced below: 14. We have heard both sides and record our findings as under : Entire demand is time-barred and proviso to Section 11A(1) I. is inapplicable : (a) All the units have come into existence much prior to 24-11-197 .....

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gmentation done much prior to 24-11-1979 cannot be to evade duty. Real cause of dispute in the present case is the proviso to Notification No. 80/76-C.E. added by Notification No. 292/79-C.E. This cannot be covered by proviso to Section 11A. (b) The legislative history surrounding the amendments made on 24-11-1979 will show that intentional evasion of duty cannot be attributed to the Assessees/Respondents. On 14-5-1979, the Central Excise & Salt and Additional Duties of Excise (Amendment) Bi .....

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case of Real Honest Textiles v. Union of India vide which the Hon ble Court held that the terms Fabric as used in the Tariff description Cotton Fabric under Tariff Item No. 19 would refer to only grey cloth and that processing of the grey cloth either by bleaching, dyeing or printing does not amount to manufacture . Thereafter, on 24-11-1979, the Central Excise and Salt Act and Additional Duties of Excise (Amendment) Ordinance, 1979 was introduced so as to give immediate effect to the amendment .....

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roduction for the manufacture of cotton fabrics subjected to any further processing. In other words, the processed cotton fabrics, when further processed within the same factory of production were wholly exempt from payment of BED and AED. (d) Vide another Notification No. 290/79-C.E., also dated 24-11-1979, unprocessed cotton fabrics of T.I. No. 19I(9) were wholly exempted from BED and AED when used within the factory of production for further manufacture of processed cotton fabrics, falling un .....

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ering. This is, because, but for the proviso, no duty would be paid on dutiable processes like bleaching, dyeing or printing carried on with aid of power or steam accompanied with dutiable finishing processes like Calendering, Stentering, Singeing, Scouring etc. as dutiable processes would be completely exempt under Notification No. 293/79-C.E., dated 24-11-1979 and finishing processes would be exempt under Notification No. 80/76-C.E. as amended. The obvious objective was to avoid a situation wh .....

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the object sought to be achieved by adding the above proviso to Notification No. 80/76-C.E. by Notification No. 292/79-C.E., dated 24-11-1979. Notification No. 80/76-C.E. as amended by Notification No. 292/79-C.E. continued to be in operation till 4-11-1982, on which date, it was superseded by similar Notification No. 253/82-C.E. Notification No. 137/77-C.E. granting total exemption from BED and AED to Cotton Fabrics processed without aid of power or steam was maintained undisturbed in Notifica .....

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s was entirely in accordance with the Government s intention. However, because of proviso added by Notification No. 292/79 to Notification No. 80/76-C.E., bleaching, dyeing or printing done without aid of power also became dutiable. This was not at all the object of the legislation, as is evident from the legislative history surrounding the amendments made on 29-11-1979. (g) Moreover, the ambiguity in the Notifications and the anomalous situation which had arisen on account of the insertion of p .....

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bove discussion we uphold the finding that the demands are barred by limitation. Manufacturing Process would be exempt under Notification II. No. 137/77-C.E., dated 18-6-1977 having been undertaken without aid of power or steam and Finishing Processes viz. Calendering and Stentering do not amount to manufacture : (a) Prior to 1979, the relevant sub-item No. I of Tariff Item No. 19 read as under : COTTON FABRICS - ….. …. …. 1. Cotton Fabrics other than (i) Embroidery in the p .....

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product; and ...... ….… (v) in relation to goods comprised in Item No. 19-I of the First Schedule, includes bleaching, mercerising, dyeing, printing, waterproofing, rubberizing, shrink-proofing, organdie processing or any other process or any one or more of these processes; Simultaneously, Tariff Item No. 19I(b) also stood amended as under, vide Act 6 of 1980 w.e.f. 12-2-1980 :- Cotton Fabrics - 19. I. Cotton fabrics, other than (i) embroidery in the piece, in strips or in motifs a .....

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processes. Thus, after the amendments made by Act 6 of 1980, each of the processes like bleaching, mercerising, dyeing, printing etc. became dutiable. Vide another Budgetary Notification No. 137/77-C.E. dated 18-6-1977, Cotton Fabrics falling under T.I. No. 19 when processed without aid of power or steam, were wholly exempted from payment of BED and AED. The relevant Notes on Budget changes (1977-78) read as under : Item 19 - Cotton fabrics - (1) ....... (2) ....... (3) Unprocessed cotton fabri .....

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y hand and mercerising by hand-operated machines. Hence, these activities would be wholly exempt under Notification No. 130/82-C.E. effective from 20-4-1982 and under Notification No. 137/77-C.E., dated 18-6-1977 prior to 20-4-1982. As per Para 6 - Page 2 of Annexure A to SCN, SDC is undertaking calendering with aid of power, admittedly with plain rollers. Such process of calendaring has been held to be not amounting to manufacture within the meaning of Section 2(f) of the Act by the Hon ble Sup .....

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and Definitions (Eighth Edition) as under : stenter; tenter An open-width fabric-finishing machine in which the selvedges of a textile fabric are held by a pair of endless travelling chains maintaining welf tension. Note 1: Attachment may be by pins (pin stenter) or clips (clip stenter). Note 2 : Such machines are used for : (a) drying, (b) heat-setting of thermoplastic material; (c) fixation of chemical finishes. Since the goods involved are Cotton Fabrics , the question of heat setting of the .....

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d the same would also not amount to manufacture as envisaged under Section 2(f) of the Act. (d) Squeezing of excess water from the fabrics also does not amount to manufacture in view of the principle laid down by the Larger Bench decision in Adreena Industries v. CCE, Chandigarh, 1987 (28) E.L.T. 364 (Tribunal). (e) Consequently, even if all the above units i.e. SDBF, SDC and SRP are one and constitute a single factory and are also treated as one manufacturer, the process of bleaching and dyeing .....

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ation concluded that no duty would be payable. We therefore answer this issue in favour of the assessees. Bar contained in proviso to Notification No. 253/82-C.E. III. applies qua a factory and not qua a manufacturer : (a) The bar created under proviso to Notification No. 253/82-C.E. is qua factory and not qua manufacturer . This is clear from a plain reading of the Notification. Admittedly, in the present case, all the three units were different factories and recognized and accepted as such by .....

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case of CCE v. Kanjur Bleaching Co. Pvt. Ltd., 2000 (117) E.L.T. 47 (Tribunal). The test is whether the separate units are one factory or different factories is premises based in view of the clear language of the proviso to Notification No. 80/76-C.E. and/or 253/82-C.E. In the present case, each process viz., bleaching, mercerising, dyeing is self-complete and distinct and treated by Tariff itself as distinct taxable events. The process of calendering and stentering are also distinct. It is als .....

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