2005 (10) TMI 490 - AT - Central Excise

Summary

Issues:
1. Duty demand under Rule 96ZQ(5)(i) and Section 11A of the Act.
2. Abatement claim due to closure of one chamber of 'BABROS' Stenter.
3. Inclusion of length of galleries in the Hot Air Chambers Stenter.

Analysis:
The appellants, engaged in manufacturing processed fabrics, challenged the duty demand of Rs. 2,35,084/- confirmed by the Commissioner of Central Excise under Rule 96ZQ(5)(i) of the Rules. The duty liability was based on annual production determined under Section 3A(3) of the Act. The dispute arose from the rejection of the abatement claim due to the closure of one chamber of the 'BABROS' Stenter and the inclusion of the length of galleries in the Stenter chambers.

Regarding the closure of the chamber, the Tribunal noted that the appellants dismantled the chamber on 24-12-98 without prior approval as required by the HASITPACD Rules 1998. As per Rule 96ZQ(7)(a), no benefit could be extended for the period from 24-12-98 to 11-1-99. The abatement under Rule 96ZQ(7)(a) is applicable only on complete closure of the Hot Air Stenter, not on the closure of individual chambers. Thus, the appellants were not entitled to abatement for the said period.

In relation to the inclusion of the length of galleries in the Stenter chambers, the Tribunal relied on the decision in the case of Sangam Processors Bhilwara Ltd. v. CCE, Jaipur, upheld by the Supreme Court. The Tribunal held that the duty demand based on the inclusion of galleries' length in the Stenter chambers was unsustainable in light of the precedent set by the Larger Bench decision.

Consequently, the Tribunal partially allowed the appeal, remanding the case for the re-computation of duty and penalty based on the findings. The duty amount and penalty were to be re-quantified in accordance with the Tribunal's determinations on the abatement claim and the inclusion of galleries' length in the Stenter chambers.