2016 (5) TMI 8 - HC - Central Excise

100% EOU - Violation of Notification No. 53/97 and 1/95 - Manufacture of plastic bags but have to manufacture the garbage bags of plastic, plastic Rolls and recycled granules of plastic - Held that - if the Letter of Permission dated 19 November 1997, under which permission to set up 100% export oriented unit for manufacture and export of garbage bags of plastic, enables the Appellant/Assessee to import plastic waste/scrap without payment of duty and to use the same in manufacture of specified goods as per the Letter of Permission, then, demand of duty on the ground that the Appellant has not manufactured garbage bags of plastic but plastic bags which are used for packaging textile materials must be clarified and with proper reasoning. As per modified or amended Letter of Permission, it was allowed to manufacture plastic bags. If the amendment is to be treated as retrospective in nature as per the Assessee, then we expected the Tribunal as last fact finding Authority to discuss as to whether that argument of the Assessee has any merit. It should have been clarified whether the Letter of Permission would govern the acts and transactions or deals in the present case or the substantial Notifications. We do not find in Tribunal s order any reference made to the relevant and germane material including terms and conditions of the Notifications, the Letter of Permission, its amendment and thereafter the effect of the same, inasmuch as, whether it can be termed as retrospective or otherwise. Therefore, we are not assisted in any manner by such a short and cryptic order of the Tribunal and the Tribunal s order impugned in these Appeals cannot be sustained. - Decided in favour of appellant

Summary

Issues:
Challenging order of Customs, Excise and Service Tax Appellate Tribunal; Interpretation of Notifications for manufacturing plastic bags; Justification of Tribunal's conclusions; Compliance with conditions of Notifications; Violation of principles of natural justice.

Analysis:
The Appeals challenge the Tribunal's order dismissing the Assessee's Appeal against the Commissioner of Central Excise's order. The Tribunal concluded that the Notifications do not permit manufacturing plastic bags, but only garbage bags of plastic, plastic rolls, and recycled granules of plastic. The substantial questions of law admitted for consideration include the justification of Tribunal's decision regarding the manufacturing of "garbage bags of plastic," the retrospective nature of an amendment to the Letter of Permission, fulfillment of conditions in the Notifications, and the Tribunal's compliance with principles of natural justice.

The Assessee argues that manufacturing plastic bags for packaging material does not violate the relevant Notifications. They highlight clarifications from authorities regarding the classification of plastic bags and garbage bags of plastic. The Assessee contends that the Tribunal failed to discuss how the demand on them can be confirmed, emphasizing reliance on the Letter of Permission and relevant Notifications for manufacturing plastic bags.

On the other hand, the Revenue asserts that there is a distinction between garbage bags of plastic and plastic bags, supporting the Tribunal's decision. They argue that clarifications from authorities or associations cannot bind the Tribunal. Both parties consented to the final disposal of the Appeals.

The Court notes that the Assessee was granted a Letter of Permission to manufacture garbage bags of plastic, supported by specific Notifications for duty exemptions. The Tribunal's dismissal without detailed reasoning on the alleged violations raises concerns. The Court emphasizes the need for a proper clarification on the demand for duty based on the type of bags manufactured by the Assessee.

Considering the lack of discussion on crucial aspects like the amendment to the Letter of Permission and the retrospective nature of changes, the Court sets aside the Tribunal's order. The matter is restored to the Tribunal for a fresh decision, ensuring a comprehensive review based on merits and legal provisions. The Court refrains from expressing any opinion on the matter, allowing both parties to appeal if necessary. The Appeals are allowed, with no order as to costs.