2008 (11) TMI 76 - SC - Central Excise

Whether the process undertaken by the appellants constituted manufacture and whether consequently the appellants were liable to pay cess under the Textiles Committee (Cess) Act petition dismissed by HC on ground of delay - since the appellants on instructions have agreed to discharge their outstanding liabilities without prejudice to their rights and contentions in the writ petitions petition is restored to file of HC - all contentions on both sides on merits expressly kept open

Summary

Issues involved:
Determining whether the process undertaken by the appellants constituted manufacturing or processing, whether the appellants were job-workers or manufacturers, liability to pay cess under the Textiles Committee (Cess) Act, interpretation of the words "value of textiles" in the Act/Rules, and the implications of the High Court's dismissal of writ petitions on the ground of delay.

Analysis:
The case involved appellants engaged in bleaching, dyeing, and processing of grey fabrics supplied by power loom industries for job-work. The main issue was whether this activity constituted manufacturing or processing, determining the appellants' status as job-workers or manufacturers, and their liability to pay cess under the Textiles Committee (Cess) Act. The High Court had disposed of writ petitions covering the period between December 1998 to December 2000, involving twelve processing companies/firms, on the ground of delay.

For the period 2001-02 to 2002-03, appellants who received show cause notices failed to file monthly Returns, resulting in ex parte assessment orders and notices of demand under the Textiles Committee (Cess) Rules. The Supreme Court, while not finding error in the High Court's judgment on delay, decided to restore the writ petitions subject to certain conditions to ensure payment of outstanding amounts and filing of monthly Returns within specified timelines.

The conditions set by the Supreme Court required appellants to deposit outstanding amounts within specific deadlines, file monthly Returns, and pay outstanding amounts for the period 2001-02 to 2002-03. Failure to comply would result in the continuation of ex parte assessment orders and notices of demand, allowing the Department to initiate recovery proceedings.

The Supreme Court emphasized that the restoration of writ petitions was contingent upon appellants meeting the specified conditions, maintaining that until compliance, the High Court would not entertain the writ petitions concerning the period December 1998 to December 2000. The Court clarified that it had not delved into the merits of the case, leaving all contentions open for both parties.

In conclusion, the civil appeal was disposed of with no order as to costs, highlighting the importance of appellants meeting the prescribed conditions for the restoration of their writ petitions, with the High Court instructed to proceed accordingly based on compliance or non-compliance with the set conditions.