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2005 (9) TMI 176 - AT - Central Excise
Issues:
1. Demand of duty and penalties imposed by the Commissioner of Central Excise on M/s. Rajalakshmi Textile Processors Pvt. Ltd. 2. Applicability of Rule 96ZQ of the Central Excise Rules, 1944 on independent textile processors. 3. Dispute regarding the dismantled stenter and its usage for fabric processing. Analysis: 1. The Commissioner of Central Excise demanded duty of Rs. 56 lakhs from M/s. Rajalakshmi Textile Processors Pvt. Ltd. for processed cotton fabrics allegedly manufactured by the company, along with penalties under Rule 96ZQ and other rules. The company argued that the stenter transferred to Ranga Textile Processors was dismantled with permission from the department, and any duty demand should be on Ranga Textile Processors, not M/s. RTPL. The High Court's ruling on the compounded levy for independent textile processors was also cited. The Tribunal noted a finding in the impugned order that fabrics processed by Ranga Rao's unit were brought back to M/s. RTPL for further processing and clearance, leading to the duty demand. 2. The Tribunal observed that the High Court had quashed the compound levy on fabrics processed by independent textile processors under Rule 96ZQ, with no stay on the judgment's operation. Considering the dismantlement of the stenter with department permission, it was prima facie concluded that no fabrics could have been processed in M/s. RTPL's premises with the stenter during the dispute period. The demand raised was under Section 3A of the Central Excise Act, and a strong prima facie case was found in favor of M/s. RTPL and Shri Ranga Rao. Consequently, there was a waiver of pre-deposit and stay of recovery for the duty and penalty amounts. This detailed analysis covers the issues related to the demand of duty and penalties, the application of Rule 96ZQ on independent textile processors, and the dispute surrounding the dismantled stenter and fabric processing, as addressed in the judgment by the Appellate Tribunal CESTAT, Chennai.
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