2023 (4) TMI 917 - HC - Central Excise

Process amounting to manufacture or not - fabrics (semi-finished goods) - failure to produce any evidence to show that the loose quantity reflected in the RG-1 Register consisted of grey fabrics which was yet to under go several process - HELD THAT - Though there is an assessment of facts by both, the Commissioner (Appeals) and the Appellate Tribunal, it is quite clear that the basic position of law has revolved around the decision in the case of M/s. Vishnu Dyeing and Printing Works. The Commissioner (Appeals) relied on the same in order to identify the nature of the goods as to whether they are finished or semi finished based on the entries in the RG-1 register. The Appellate Tribunal relied on its own decision in the same case to hold it otherwise. It is clear from the order of the Appellate Tribunal that the Appellate Tribunal has been heavily influenced by the decision rendered in the case of M/s. Vishnu Dyeing and Printing Works. The contentions of the learned counsel for the Respondent cannot be accepted that the discussion of the Tribunal should be severed to uphold certain findings. Since the manner in which one of the main findings sought to be scrutinized is reversed, the submission of the learned counsel for the Appellants, needs to be accepted that the matter needs reconsideration by the Appellate Tribunal. Appeal filed by the department remanded for reconsideration.

Summary

Issues involved:
The appeal challenges the order passed by the Customs Excise and Service Tax Appellate Tribunal setting aside the order of the Commissioner (Appeals) regarding the duty chargeable on processed fabrics under the Central Excise Act, 1944.

Facts and Decision:
The appellants processed fabrics on a job work basis and held stock of manufactured and semi-finished fabrics as of a specific date. The Commissioner (Appeals) allowed the appeal filed by the appellants, citing a previous decision in a similar case. However, the Appellate Tribunal overturned this decision, stating that the fabrics in question could not be considered semi-finished goods. The Tribunal emphasized that once a fabric is mentioned in the RG-1 Register, it must be considered a finished product. The Tribunal's decision was influenced by a specific case, leading to the challenge by the department and subsequent appeal by the appellants.

Legal Analysis:
The High Court reviewed the orders of both the Commissioner (Appeals) and the Appellate Tribunal. While both had assessed the facts, the key legal issue revolved around the interpretation of whether the fabrics were finished or semi-finished, with differing conclusions based on precedent cases. The Court noted the heavy reliance of the Tribunal on a specific case and concluded that a reconsideration was necessary. The Court highlighted the need for the Tribunal to align its decision with the law laid down by a previous Division Bench judgment.

Judgment:
The High Court quashed and set aside the Tribunal's order, restoring the department's appeal for fresh consideration. The Tribunal was directed to re-examine the appeal in line with the legal principles established in the Division Bench judgment. The appeal was allowed and disposed of accordingly.