2014 (8) TMI 778 - AT - Central Excise

Exemption under Exemption Notification No. 6/2002-CE dated 01.3.2002, read with list -6 (5), or Notification No. 6/2006-CE dated 01.3.2006 - Whether textile machinery Relax Drum Machine or Relax Drum Washer manufactured by the above textile machinery manufacturers, are eligible for the benefit of serial No. 193 of the table to Exemption Notification No. 6/2002-CE dated 01.3.2002, read with list -6 (5), or Notification No. 6/2006-CE dated 01.3.2006 - Held that - Manufacturing appellants/ respondents have relied upon the technical opinions given by SAMSIRA, Mumbai and MMTRA, Surat to emphasize the point that both Relax Drum machine and Conveyer Drying machines are different and cover under the impugned exemption notifications. It has been opined by MMTRA that both the Relax Drum Machine/ Relax Drum washer and Conveyer Drying machines are different. There is thus no doubt that the machines Relax Drum Machine (Relax Drum washer) is not a drying machine. Whether the description given in the exemption notifications means only the drying machines or it also covers Relax Drum Machine (Relax Drum washer) manufactured by the assessees - Held that - functions of Conveyer Drying machine and Relax Drum washer (Relax Drum Machine) is the same i.e. Relaxation of fabrics/fibre. The word Drum dryer has been specified at Sr. No. (v) above. When this description is read with the relaxation function of the activities, it becomes evident that a drying machine, like Drum dryer, exist which performs relaxation. In a further reference made to the Textile expert, it was opined that no machine by the name Relax Drum Dryer has came to their knowledge as per the available literature on the subject. In view of the above when a during machine Drum Dryer exists which does the work of relaxation, the opinion given by MMTRA that Relax Drum Dryer does not exist, on the face of it, appears fallacious. Further, all the machines specified in each of the heading of List 6 or List 2 respectively of Notification No. 6/2002-CE and 6/2006-CE convey only those machine which carried out a specific activity. Accordingly, Sr. No. 6(5) and 2(5) of the relevant exemption notifications has to be considered to be applicable only to the categories of drying machines. As the machine manufactured by the manufacturers is not a drying machine, therefore the benefit of above exemption notifications is not available to the impugned manufacturers. Invocation of extended period of limitation - Held that - nowhere in the declarations filed/ records maintained, it was given by the manufacturers that the said machine works by washing. Also none of them have ever approached the Revenue to seek any opinion that there is confusion in the interpretation of the relevant entries of exemption notifications. Accordingly, extended period has been rightly invoked in these proceedings by the lower authorities - Decided in favour of Revenue.

Summary

Issues:
Common issue involved in all appeals: Eligibility of textile machinery 'Relax Drum Machine' or 'Relax Drum Washer' for exemption under specific notifications.

Analysis:
1. Background: Appeals filed against orders by Commissioner of Central Excise & S.T., Surat. Issue is whether machinery manufactured by textile manufacturers qualifies for exemption under specific notifications.

2. Appellants' Arguments: Appellants argue Relax Drum Machine is eligible for exemption under relevant notifications. Opinions from SASMIRA and MMTRA support their claim. They assert time-barring of demands due to clear description in invoices and returns.

3. Respondents' Arguments: Revenue argues machinery doesn't fall under specified categories for exemption. They challenge opinions from SASMIRA and MMTRA, citing lack of on-site inspection. Revenue claims mis-declaration justifies extended period for demands.

4. Judgment Analysis: Court examines whether Relax Drum Machine qualifies as a drying machine under exemption notifications. Technical opinions differ on categorization. Court concludes Relax Drum Machine doesn't fit the description of drying machines listed in notifications.

5. Extended Period Invocation: Court upholds Revenue's invocation of extended period due to alleged mis-declaration. Manufacturers failed to clarify confusion or seek opinion, justifying extended period for demands.

6. Verdict: Appeals by appellants rejected, Revenue's appeals allowed. Decision announced on 21.08.2014.