2006 (3) TMI 726 - HC - Central Excise

Demand - Whether the Tribunal was justified in sustaining the demand of duty on the length of gallery notwithstanding its contrary views regarding the maintainability of the appeal against the determination of the capacity? - HELD THAT - It is seen that despite the aforesaid law laid down by the Supreme Court in the case of SPBL Ltd. 2002 (9) TMI 113 - SUPREME COURT , the Tribunal allowed the appeal and set aside the order of Commissioner (Appeals) on the ground that the order, has attained finality. In our considered view, by the time the matter reached to the Tribunal, the law having been settled by the Supreme Court holding that the length of galleries having no fan or radiator attached to it cannot be taken into consideration while determining the numbers of chambers, the Tribunal was competent to consider and rather ought to have considered the applicability of law laid down by the Supreme Court in the case of SPBL Limited to the facts of the present case. Thus, the questions are answered by observing that the matter requires reconsideration by the Tribunal. We, accordingly, quash and set aside the order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai-III and restore the Appeal, the Commissioner of Central Excise, Mumbai-VI v. Om Textile Pvt. Ltd., to its file for fresh consideration in accordance with law and the observations made hereinabove.

Summary

Issues:
1. Tribunal's decision on demand based on the length of the gallery contrary to established law.
2. Tribunal's justification for sustaining duty demand on the gallery's length despite conflicting views on appeal maintainability.

Analysis:
1. The appeal questioned the Tribunal's decision on the demand, raising the issue of whether it was correct to sustain the demand based on the length of the gallery, which was contrary to the law established by the Supreme Court in a previous case. The Supreme Court's judgment in the case of Commissioner of Central Excise v. SPBL Limited was cited, which clarified that galleries without fans or radiators should not be included in counting the number of chambers in a hot air stenter. Despite this legal precedent, the Tribunal upheld the demand, leading to the need for the High Court to intervene.

2. Another issue raised was the Tribunal's decision to maintain the duty demand on the gallery's length while having conflicting views on the appeal's maintainability concerning capacity determination. The appellant objected to the inclusion of gallery length in determining the number of chambers, emphasizing the environmental purpose of the galleries. The Additional Commissioner overruled the objection and imposed a penalty, which was later set aside by the Commissioner (Appeals). However, the Tribunal, despite the Supreme Court's clear ruling on the matter, upheld the demand, leading the High Court to quash the Tribunal's decision and order a fresh consideration in line with the law.

In conclusion, the High Court, consisting of R.M. Lodha and J.P. Devadhar, JJ., found that the Tribunal erred in its decision regarding the demand based on the gallery's length, contrary to established legal principles. The Court, citing the Supreme Court's judgment in a similar case, set aside the Tribunal's decision and ordered a fresh consideration in accordance with the law. The judgment highlighted the importance of adhering to legal precedents and ensuring consistency in decision-making processes.