2017 (9) TMI 1428 - AT - Central Excise

Demand - the appellant units had processed stock of sarees with the aid of power attracting duty of Central Excise - Held that - there was no machine to be used with the aid of power for the process of dyeing found installed in the premises of appellant No. 1 (M/s Rajkamal Textiles Printery). When it is so the Revenue s basic premise that the appellant M/s Rajkamal Textiles Printery carried out the process of dyeing of fabrics on five Jigar machines running with electric motors does not stand to the required scrutiny. Therefore, it appears that the proceedings initiated against the appellant No. 1, M/s Rajkamal Textiles Printery by issuance of SCN No. 58/2003 dated 28.02.2003 cannot pass the scrutiny under the law of Central Excise. However considering the fact that the impugned order did not consider certain evidences like photographs, videography record as pleaded by appellants, we are not giving any further observations on this - matter on remand. There is no dispute on the fact that the premises of M/s Madhuri Print had physical installation of said five Jigar Machines. However the appellant No. 2 - M/s Madhuri Print submits that though five dyeing machines (Jigar machines) were available in their factory they were actually getting dyeing process undertaken through outside workers. The appellant No. 2 argues that their bills in this regard were not taken into consideration - matter on remand. Appeal allowed by way of remand.

Summary

Issues:
- Confirmation of demand of Central Excise duty against two appellants
- Jurisdiction of demand against the first appellant
- Validity of demand against the second appellant
- Consideration of evidences and submissions
- Duty liability against the second appellant

Confirmation of demand of Central Excise duty against two appellants:
The appellants, M/s Rajkamal Textiles Printery and M/s Madhuri Print, appealed against an order confirming the demand of Central Excise duty along with interest and penalties. The appellants carried out fabric dyeing processes using electric motors. The Revenue alleged that the appellants processed stock of sarees with power, leading to duty liability. The search conducted revealed various processes carried out with power aid. Statements were recorded, and a Show Cause Notice was issued, resulting in the confirmed demands and penalties.

Jurisdiction of demand against the first appellant:
The first appellant, M/s Rajkamal Textiles Printery, contested the demand, stating that there was no dyeing machine in their factory. The investigating officer also confirmed this. The appellant argued that without a dyeing facility, no duty liability could be imposed. They highlighted discrepancies in the Commissioner's findings and emphasized that job work transactions were conducted through external workers, supported by documents like bills and balance sheets. The Commissioner's failure to consider explanations and evidence was criticized.

Validity of demand against the second appellant:
The second appellant, M/s Madhuri Print, acknowledged the presence of dyeing machines but claimed the dyeing process was outsourced. Payments to job workers and tax deductions were mentioned to support this claim. The appellant contended that their bills were not considered, and the Commissioner misread the balance sheet. The appellant argued that a thorough investigation was not conducted on the bills found during the search.

Consideration of evidences and submissions:
Both sides presented their arguments, with the appellants emphasizing the lack of dyeing machines in the first appellant's factory and outsourcing of dyeing processes by the second appellant. The impugned order was reviewed, noting the absence of machines for dyeing in the first appellant's premises. The order was set aside, remanding the matter for fresh consideration by the Commissioner with a directive to assess all relevant evidence and provide a personal hearing to the appellants.

Duty liability against the second appellant:
The liability of duty against the second appellant was confirmed based on the presence of Jigar machines for dyeing. However, the appellant claimed outsourcing of the dyeing process, which was not adequately considered. The matter was remanded for a fresh decision after a thorough examination of all evidence and providing a personal hearing to the appellant.

In conclusion, the impugned order was set aside, and the appeals by both appellants were allowed for a remand based on the issues identified and the need for a comprehensive review of evidence and submissions.