2000 (6) TMI 799 - AT - Central Excise

Issues Involved:
1. Application of Notification 80/76 or Notification 126/76.
2. Interpretation of the proviso added by the amendment on 24-11-1979.
3. Determination of whether the seven units constitute a single factory.
4. Applicability of Notification 137/77.
5. Demand of duty under Notification 130/82 after its amendment.
6. Inclusion of M/s. Navneet Manufacturing Company in the duty demand.
7. Penalty on M/s. Natwar Textile Processors Pvt. Ltd.

Issue-wise Detailed Analysis:

1. Application of Notification 80/76 or Notification 126/76:
The dispute centers on whether the appellant is entitled to the benefits of Notification 80/76, which exempts certain cotton fabrics from duty when subjected to specified finishing processes. The notification was amended to include a proviso that restricts the exemption if certain processes are conducted within the same factory.

2. Interpretation of the Proviso Added by the Amendment on 24-11-1979:
The second proviso of the amendment is relevant, which states that no exemption shall apply if cotton fabrics are subjected to any process specified in the Table within the same factory where other processes are also conducted. The Commissioner concluded that the processes took place in one factory, thus invoking this proviso to deny the exemption.

3. Determination of Whether the Seven Units Constitute a Single Factory:
The department argued that the seven units were essentially one factory under the same ownership and management. Evidence showed that these units were located under the same roof and owned by the same set of persons, effectively making them a single entity. The appellant contested this, stating that each unit had a separate identity and ownership.

4. Applicability of Notification 137/77:
Assuming the units were a single factory, the appellant argued that all processes except calendering were conducted without the aid of power, thus qualifying for exemption under Notification 137/77. The Supreme Court's decision in Mafatlal Spinning & Weaving Mills v. CCE was cited, which held that calendering with plain rollers is not a manufacturing process, thus supporting the appellant's claim for exemption.

5. Demand of Duty Under Notification 130/82 After Its Amendment:
The department demanded duty based on the amended Notification 130/82, which included keiring operations as a process subject to duty. The appellant contended that keiring operations had ceased before the amendment came into effect. The statement of the manager of Natwar Textile Processors Pvt. Ltd. supported this claim, and there was no evidence to rebut it.

6. Inclusion of M/s. Navneet Manufacturing Company in the Duty Demand:
The Collector included M/s. Navneet Manufacturing Company in the duty demand, although it was not part of the specific charge in the show cause notice. The Tribunal found this inclusion to be outside the scope of the notice, as there was no proposal to treat it as part of Natwar Textile Processors Pvt. Ltd.

7. Penalty on M/s. Natwar Textile Processors Pvt. Ltd.:
Given the Tribunal's findings that the benefit of the notifications could not be denied and the processes were exempt from duty, the penalty imposed on M/s. Natwar Textile Processors Pvt. Ltd. was also set aside.

Conclusion:
The appeal was allowed, and the impugned order was set aside. The Tribunal concluded that the benefit of the notifications could not be denied, and no duty or penalty was imposable on M/s. Natwar Textile Processors Pvt. Ltd.

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