2005 (1) TMI 305 - AT - Central Excise

Summary

Issues Involved:
1. Interpretation of the use of power in the processing of cotton fabrics and its impact on exemption eligibility.
2. Application of specific exemption notifications (48/90-C.E., 28/94-C.E., 41/95-C.E., 40/95-C.E., 8/96-C.E., 9/96-C.E., 35/99-C.E., and 43/99-C.E.).
3. Invocation of the extended period under the proviso to Section 11A of the Central Excise Act, 1944.
4. Validity of the authorization to file the appeal under Section 35E.
5. Retrospective application of amending notifications.

Detailed Analysis:

1. Interpretation of the Use of Power in Processing:
The adjudicating authority concluded that the drawal of water using power to overhead tanks could not be treated as the use of power in the processing of fabrics, thus entitling the respondents to exemption under Notifications 48/90-C.E., 28/94-C.E., and 41/95-C.E. The processes of bleaching, dyeing, and printing carried out without the aid of power were deemed eligible for exemption under Notification 40/95-C.E. The silicate color fixation process was considered a curing process and eligible for exemption under Notifications 48/90-C.E. and 41/95-C.E. However, processes like stentering, padding, and pressing carried out with the aid of power were not entitled to exemption under Notification 9/96-C.E.

2. Application of Specific Exemption Notifications:
The adjudicating authority found that the respondents were entitled to exemption under Sl. No. 13 of Notification 9/96-C.E. since the processes of bleaching, dyeing, and printing were carried out without the aid of power. The Revenue contended that the exemption should not apply if any of the 12 processes listed in Sl. No. 13 were carried out with the aid of power. The tribunal agreed with the adjudicating authority's interpretation that "these processes" referred only to bleaching, dyeing, and printing, and not to the 12 processes listed in Sl. No. 13.

3. Invocation of the Extended Period under Section 11A:
The Revenue argued that the respondents had misdeclared facts and suppressed the use of power, justifying the invocation of the extended period under the proviso to Section 11A. However, the tribunal agreed with the respondents' contention that the department had full knowledge of their activities due to earlier adjudication proceedings, thus there was no justification for invoking the extended period.

4. Validity of the Authorization to File the Appeal:
The respondents argued that the authorization to file the appeal under Section 35E was not signed by the concerned Member of the CBEC but was merely attested by a Superintendent, rendering the appeal non est, illegal, and improper. The tribunal did not specifically address this issue in the judgment.

5. Retrospective Application of Amending Notifications:
The Revenue contended that Notifications 35/99-C.E. and 43/99-C.E., which clarified that certain processes done with power should be deemed to have been done without power, should be prospective. The tribunal disagreed, citing the Apex Court's decision in Johnson & Johnson Ltd. v. CCE, which held that subsequent notifications clarifying earlier ones should be given retrospective effect. Thus, the amending notifications were deemed to have retrospective effect.

Conclusion:
The tribunal affirmed the findings of the adjudicating authority that the respondents' units were covered under the relevant exemption notifications for the entire period of dispute. The tribunal dismissed the Revenue's appeals, finding no merit in their arguments and agreeing with the respondents' contentions regarding the interpretation of the notifications and the non-applicability of the extended period under Section 11A.