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2006 (4) TMI 74 - AT - Central ExciseWhether the process of decatising (without use of power for products) attracts Excise duty after the budget of 2003 - as Proviso to Rule 12(B) vide Notification No. 24/03, duty from 1-3-2003 is not leviable on the job workers - duty has to be levied only on the weavers and dealers & owners of fabrics - confirmation of demands from 1-3-2003 on the job workers is not sustainable - Moreover, the issue of non-payment of duty was known to the Dept., hence no suppression of facts demand time barred
Issues Involved:
1. Whether the process of decatising attracts Central Excise duty after the budget of 2003. 2. Whether the demands are time-barred. Detailed Analysis: Issue 1: Whether the process of decatising attracts Central Excise duty after the budget of 2003 The appellants contended that the process of decatising does not amount to manufacture as it merely involves steam pressing of sarees to remove wrinkles and creases, without the use of electricity. They argued that decatising is synonymous with blowing, which has been exempted from duty since 1996. The appellants also cited expert opinion from "Sasmira" and the Fairchild's Dictionary of Textiles, which confirmed that decatising and blowing are the same process. They further argued that the process does not create new goods, thus it should not attract excise duty. The department, however, argued that decatising is distinct from blowing and is subject to duty under Notification No. 14/02-C.E., dated 1-3-2002, and its amendments. They contended that decatising results in a finished product ready for sale, hence it qualifies as a manufacturing process. The Tribunal examined the "Sasmira" report, which confirmed that decatising and blowing are identical processes. The Tribunal concluded that since blowing was exempted, decatising should also be exempted. It was noted that the process does not bring new goods into existence, aligning with the Supreme Court's ruling in the case of Delhi Cloth and General Mills [1978 E.L.T. J 336 SC]. The Tribunal also considered the legislative intent and subsequent notifications, concluding that the exemption for blowing extended to decatising, making the latter non-dutiable. Issue 2: Whether the demands are time-barred The appellants argued that the demands were time-barred as the department was aware of their processes through representations made by their associations. They cited the Commissioner's acknowledgment in OIA No. 112/05, which noted that the issue of non-payment of duty was known to the department. The department, however, contended that the appellants had suppressed facts and that the demands were not time-barred. They argued that the appellants did not obtain registration certificates until August 2003, indicating an intention to evade duty. The Tribunal examined the evidence and found that the department was indeed aware of the processes being carried out by the appellants. It was noted that several representations were made to the Chief Commissioner, and the issue was in correspondence with the government. The Tribunal cited several Supreme Court judgments, including Chemphor Drugs & Liniments [1989 (40) E.L.T. 276 (SC)] and Cosmic Dye Chem [1995 (75) E.L.T. 721 (SC)], which established that for the Proviso to Section 11-A to be invoked, there must be a statutory obligation to declare certain details, which the appellants had not withheld. The Tribunal concluded that the demands were time-barred, as there was no suppression of facts with an intention to evade duty. Conclusion: (a) The demands are barred by time. (b) The process of decatising is the same as blowing, which is exempted from duty. Therefore, decatising is also exempted from excise duty. Notification No. 47/02, dated 6-9-2002, is clarificatory and has retrospective effect from 1-3-2002. (c) The process of calendering is not a manufacturing process and is not subject to duty. The demands on job workers from 1-3-2003 are not leviable as per Rule 12(B) and the government's press note dated 25-3-2003, which state that duty should be levied on weavers/dealers and owners of fabrics, not on job workers. The appeals were allowed with consequential relief.
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