2018 (5) TMI 23 - AT - Central Excise

Clandestine removal - textile auxiliary chemicals - Though it was claimed that it was the Bhilwara unit which was engaged in the manufacture micro emulsion concentrate (MECT) that was sent to the appellant at Ahmedabad for dilution by adding water before supply in market, it was alleged by central excise authorities that it was the appellant who had engaged in manufacture of goods that were liable to duty. Held that - The process of manufacture of textile auxiliary chemical requires addition of emulsifier which serves as an active agent with the base material and the resultant products are distinguishable from the input in name, quality, character and use. Consequently, the process carried out by the appellant is undoubtedly manufacture within the meaning of section 2(f) of Central Excise Act, 1944. The significance of computation of clearances based on the paper slips cannot be washed away. Mere assertion of non-dutiability is not a substitute for evidence. No submission was made during the course of hearing except inadequacy of evidence and absence of facility to carry out any activity other than blending with water. The appellant is, accordingly, liable to duties of excise on the product cleared by them which was admittedly not discharged - demand upheld. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Liability of duty for the period 1993-1996.
2. Classification and dutiability of textile auxiliary chemicals.
3. Validity of the refund claims.
4. Conduct of the appellant's counsel in court.

Detailed Analysis:

1. Liability of Duty for the Period 1993-1996:
The primary dispute pertains to the period between 1993 and 1996 regarding whether the appellant undertook manufacturing activities. The appellant contended that the dutiability does not arise from mere dilution of chemicals with water during the disputed period since such activities were deemed as manufacture only after March 1997. However, the adjudicating authority found that the appellant was in possession of the necessary machinery before December 1997 and had engaged in the manufacture of textile auxiliary chemicals, thus making them liable for excise duties.

2. Classification and Dutiability of Textile Auxiliary Chemicals:
The appellant was alleged to have manufactured and cleared textile auxiliary chemicals without paying excise duties. The adjudicating authority confirmed the duty liability based on the findings that the appellant was involved in the manufacture of goods that were liable to duty. The process carried out by the appellant, which involved mixing emulsifiers with amino silicon to produce textile auxiliary chemicals, was deemed as manufacture under section 2(f) of the Central Excise Act, 1944. The Tribunal upheld the adjudicating authority's decision, stating that the appellant's activities constituted manufacturing, thus affirming the duty liability and penalty imposed.

3. Validity of the Refund Claims:
The appellant had claimed refunds for amounts deposited during the investigation and as a condition for stay of recovery during the pendency of the main appeal. The original authority sanctioned the refund claims, but this decision was set aside on appeal by the Revenue. The Tribunal, considering the outcome of the main appeal, dismissed the refund claims, stating that the sanction of the refund claim was vitiated under the circumstances.

4. Conduct of the Appellant's Counsel in Court:
The Tribunal noted the inappropriate conduct of the appellant's counsel, Mr. Paresh M. Dave, who threatened to boycott the bench and staged a walkout along with other counsels. The Tribunal expressed disquiet over this behavior, emphasizing that such actions undermine the judicial process and the trust reposed by litigants in the legal system. The Tribunal condemned the counsel's conduct but chose to condone it without further action, urging introspection by the counsel and his colleagues.

Conclusion:
The Tribunal upheld the duty liability and penalties imposed on the appellant, dismissed the refund claims, and expressed strong disapproval of the conduct of the appellant's counsel. The judgment emphasizes the importance of maintaining decorum and respect in judicial proceedings, ensuring that the interests of justice and the litigants are upheld.