1983 (11) TMI 294 - AT - Central Excise

Issues Involved:
1. Limitation period for demands.
2. Liability of the National Textile Corporation (NTC) for demands prior to 1-4-1974.
3. Validity of the show cause notice issued to Bengal Luxmi Cotton Mill instead of NTC.
4. Definition of "cloth" under the Khadi and Other Handloom Industries Development (Additional Excise Duty on Cloth) Act, 1953.
5. Applicability of handloom cess on goods not considered "cloth" in common parlance.

Issue-Wise Detailed Analysis:

1. Limitation Period for Demands:
Shri Bannerjee argued that the demands were barred by limitation under Rule 10, which allowed a demand only for three months prior to the issue of the show cause notice. However, it was clarified that under Rule 173J, effective from 1969, the applicable time limit was one year for goods under the Self Removal Procedure. Consequently, the demands in appeals Nos. 364/79, 365/79, and 366/79 were within time. For appeal No. 100/79, the demand was within time for the period from 25-3-1974 to 30-11-1974 but time-barred for the earlier period.

2. Liability of the National Textile Corporation (NTC) for Demands Prior to 1-4-1974:
Shri Bannerjee contended that under Section 5 of the Sick Textile Undertakings (Nationalisation) Act, 1974, the NTC was not liable for any liability of the erstwhile owners of the mills incurred prior to 1-4-1974. This argument was conceded by the Department, acknowledging that the NTC could not be held liable for demands relating to the period from May 1972 to March 1974, which is the major part of the period covered in appeal No. 100/79.

3. Validity of the Show Cause Notice Issued to Bengal Luxmi Cotton Mill Instead of NTC:
Shri Bannerjee argued that the show cause notice was invalid as it was addressed to Bengal Luxmi Cotton Mill and not to the NTC. This ground was not taken at any earlier stage, and the appellants continued to use the name Bengal Luxmi Cotton Mill, even in the vakalatnama filed with the revision application. Therefore, this argument lacked substance and was not discussed further.

4. Definition of "Cloth" Under the Khadi and Other Handloom Industries Development (Additional Excise Duty on Cloth) Act, 1953:
Shri Bannerjee argued that the term "cloth" as defined in Section 2(b) of the Charging Act did not include "grey markin." The term "cloth" had the meaning assigned to it in the First Schedule to the Central Excises and Salt Act, 1944, which referred to "cotton fabrics" and other types of fabrics. Shri Tayal countered that the term "fabrics" was used synonymously with "cloth" in the Central Excise Tariff Schedule. Accepting Shri Bannerjee's argument would render the Charging Act a nullity, which is against the principles of statutory interpretation. The Tribunal agreed with Shri Tayal, considering "cloth" synonymous with "fabrics."

5. Applicability of Handloom Cess on Goods Not Considered "Cloth" in Common Parlance:
Shri Bannerjee argued that "grey markin" was not commonly known as "cloth." However, no specific evidence was provided to support this claim. The Tribunal noted that "grey markin" was included in the definition of "long cloth" by the Textile Commissioner and that the appellants themselves referred to the goods as "cotton fabrics." Therefore, the Tribunal held that the goods were "cloth" for the purpose of levying handloom cess.

Conclusion:
The Tribunal concluded that the goods in question were liable to handloom cess. However, the NTC was not liable for handloom cess for the period prior to 1-4-1974. Consequently, appeal No. 100/79 was allowed to the extent of setting aside the demand for the period prior to 1-4-1974, and the appeal was otherwise rejected. The other three appeals were rejected in toto.

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