2003 (11) TMI 108 - HC - Central Excise

Summary

Issues:
Challenge to CEGAT judgment allowing appeal on excisability of cotton cloth bags under Central Excise Act.

Analysis:
The case involved a challenge to a judgment by CEGAT regarding the excisability of cotton cloth bags manufactured by a respondent along with hybrid seeds. The Department claimed the respondent was a manufacturer under the Central Excise Act and demanded duty payment. The Commissioner confirmed the duty demand, levied penalties, and interest. The respondent appealed to CEGAT, which allowed the appeal, setting aside the Commissioner's judgment.

The key issue revolved around whether the respondent qualified as a manufacturer under the Central Excise Act. The Department argued that the respondent's activities of purchasing cotton cloth, printing, cutting, and stitching bags for distribution of hybrid seeds constituted manufacturing. However, CEGAT found that the respondent did not have control over the stitching process, as the cloth was given to others for stitching without the respondent's supervision. CEGAT emphasized the lack of control by the respondent in the stitching process as a crucial factor in determining manufacturing status.

The legal dispute also delved into the interpretation of relevant case laws. The Department relied on the case of Bajrang Gopilal Gajabi, where a similar scenario was deemed manufacturing. In contrast, CEGAT favored the decision in Ujagar Prints, highlighting the absence of control by the respondent in the stitching process. The Court noted the differing compositions of the benches in the cited cases, with Ujagar Prints decided by a larger bench than Bajrang Gajabi. Ultimately, the Court found CEGAT's decision reasonable and declined the Reference Application, upholding the CEGAT judgment.

In conclusion, the Court rejected the Reference Application, affirming CEGAT's decision that the respondent was not a manufacturer of cotton bags under the Central Excise Act due to the lack of control over the stitching process. The judgment highlighted the importance of control in manufacturing determination and the precedence of case law interpretations in such matters.