TMI Blog2019 (6) TMI 1560X X X X Extracts X X X X X X X X Extracts X X X X ..... Order per : V. Bhavani Subbaroyan, J.]. - This writ petition is filed praying to quash the Final Order No. 593/10, dated 28-5-2010 [2010 (256) E.L.T. 107 (Tribunal)] on the file of the first respondent/Appellate Tribunal. 2. The case of the petitioner is that the petitioner Mills is a manufacturer of Tarpaulin fabric and Tarpaulin made-ups falling under Central Excise Tariff Act, 1985 and are a registered unit. The second respondent/Commissioner of Central Excise, Chennai issued an Order-in-Original No. 58/95 in C. No. V/59/15/3/93 CX Adj., dated 24-7-1995 pursuant to the issuance of show cause notice classifying the coated cotton fabric (Tarpaulin Fabric) manufactured and cleared by the petitioner under CSH 5906.90 and demanded duty to the tune of ₹ 73,60,116/- under proviso to Section 11A of Central Excise Act, 1944 by invoking extended period of limitation and also imposed penalty of ₹ 5,00,000/- under erstwhile Rule 173Q of Central Excise Rules, 1944. 3. The petitioner preferred an appeal against the above order before the Tribunal and the Tribunal, vide its Final Order No. 1402/1996, dated 3-8-1996 dismissed the appeal and upheld the order of the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premise that the activities engaged namely, cutting, stitching and eye-letting by the petitioner would not amount to manufacture. The Learned Counsel for the petitioner further submits that the Hon ble Apex Court in the case of Commissioner of Central Excise, Chennai-II, Commissionerate v. Tarpaulin International reported in (2010) 9 SCC 103 = 2010 (256) E.L.T. 481 (S.C.) has held that the process of cutting, stitching and fixing eyelets would not amount to manufacture, since tarpaulin continues to be a cotton fabric even after stitching and eyeleting. Therefore, it is the contention of the Learned Counsel for the petitioner that when the impugned process itself does not amount to manufacture, the question of levying duty does not arise at all and thus, the levy of duty for the period itself is unsustainable, without authority of law and in any view, when levy of duty is impermissible, levy of interest, which is consequential, cannot be sustained. 7. The Hon ble Apex Court while answering the question whether the tarpaulin made-ups are covered under 6301.00 CETA Schedule and the said commodity in question resulted from manufacture as envisaged under Section 2(f) of the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll those judgments, the Hon ble Supreme Court has observed that manufacture implies a change, but every change is not a manufacture and yet every change in an article is the result of treatment, labour and manipulation. But something more is necessary . There must be transformation, a new and different article must emerge, having a distinctive name, character or use . 10. The definition was amended and Section 2(f)(ii) was introduced vide Central Excise Tariff Act with effect from 28-2-1986 by Act 5 of 1986. It is amended thus : Manufacture includes any process which is specified in relation to any goods in the Section or Chapter Notes of the Central Excise Tariff Act, 1985 as amounting to manufacture . 11. The Hon ble Apex Court further held that whenever a commodity undergoes a change, as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity. However, the Hon ble Apex Court in the case of India Cine Agencies v. Commissioner of Income Tax, Madras [2009 (233) E.L.T. 8 (S.C.)] observed, that, it is only when the change or a series of changes takes the commodity to the point where commercially it can no long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Excise Act, 1944 under the definition of manufacture . 16. It could be seen that the petitioner has also paid ₹ 3,05,300/- in 12 instalments from 29-12-2004 to 5-6-2007 in spite of there being a bad financial position and as per Hon ble Supreme Court s decision, on the cut of date , there was no Section 11AA of the Central Excise Act, 1944, in existence and accordingly, the respondent cannot claim any interest for the said period and this Court is of the view that show cause notice classifying the coated cotton fabric (Tarpaulin Fabric) manufactured and cleared by the petitioner under CSH 5906.90 and the demanding of interest under Section 11AA of the Central Excise Act by invoking extended period and the Final Order No. 593 of 2010, dated 28-5-2010 on the file of the first respondent are quashed. 17. The respondent s contention is that the petitioner is liable to pay interest as per the rates applicable from time to time with effect from 12-9-1995 on the belated payment of duty, based on the provisions of Section 11AA r/w. Explanatory Note-1, as evaluated in Annexure-A enclosed to the show cause notice. Section 11AA of the Act reads as follows :- Section 11A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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