2002 (9) TMI 113 - SC - Central Excise

Whether galleries attached to the chambers of a hot air stenter are deemed to be one chamber of a hot air stenter? Held that - The Tribunal arrived at a conclusion that the Explanation to Rule 5 makes it clear that a float drying machine or any other equipments mentioned therein must be for aiding the process of heat setting or drying of fabrics. The Tribunal observed that a float drying machine is aiding the process of heat setting or drying of fabrics and other equipments contemplated by Explanation-I should also have like utility. This part of the reasoning of the Tribunal cannot be said to be illegal or erroneous because the Explanation itself specifies that other equipment attached to a stenter should also be for aiding the process of heat setting or drying of the fabrics. The Tribunal found that a gallery, which is having no fan or radiator attached to it, cannot come within the purview of interpretation as contemplated by Explanation-I. Further, on the basis of the aforesaid amended Rules, the Tribunal negatived the contention raised by the Department that while counting number of chambers in each of the hot-air stenters, the galleries attached to it would be deemed to be one chamber of a stenter. Amended Rules clarify and remove the ambiguity particularly which arose because of the Trade Notice. Appeal dismissed.

Summary

Issues:
Whether galleries attached to the chambers of a hot air stenter are deemed to be one chamber of a hot air stenter.

Analysis:

Issue 1: Interpretation of Central Excise Act and Rules:
The primary issue in this case revolved around the interpretation of the Central Excise Act and the relevant Rules, specifically the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules of 1998 and 2000. The contention was whether the galleries attached to a stenter should be considered as one chamber of the stenter for the purpose of determining production capacity. The Rules provided guidelines for determining the annual capacity of production by considering factors like the number of chambers in a hot air stenter. The Explanation-I to Rule 5 of the 1998 Rules clarified that certain equipment attached to a stenter, like a float drying machine, should be deemed as one chamber, but the 2000 Rules excluded galleries from this definition.

Issue 2: Application of Trade Notice and Tribunal's Interpretation:
The Trade Notice dated February 27, 1999, clarified the inclusion of galleries attached to a stenter for capacity determination purposes. The Tribunal considered this notice and ruled that the float drying machine or any other equipment attached to a stenter should aid the process of heat setting or drying of fabrics. The Tribunal emphasized that for an equipment to be considered as one chamber, it must serve a purpose related to the fabric treatment process. The Tribunal's decision was based on the requirement that the equipment should aid in the specific processes mentioned, and a gallery without relevant attachments did not meet this criterion.

Issue 3: Supersession of Rules and Tribunal's Decision:
The Rules of 1998 were superseded by the 2000 Rules, which clarified the exclusion of galleries from being deemed as one chamber of a stenter. The Tribunal correctly applied the amended Rules and rejected the Department's contention that galleries should be counted as chambers. The Tribunal's decision aligned with the amended Rules and removed any ambiguity that arose due to the Trade Notice. The Tribunal's reasoning was found to be legal and valid, as it adhered to the specific requirements outlined in the Rules.

Conclusion:
In conclusion, the Supreme Court upheld the Tribunal's decision, dismissing the appeals and Special Leave Petitions. The Court found that the Tribunal's interpretation of the Rules and the exclusion of galleries from being deemed as chambers was appropriate. The Court emphasized that the Rules in question were no longer in effect, as they were deleted in 2000, and the relevant Act provision was omitted in 2001. Therefore, the Tribunal's reliance on the contemporanea expositio doctrine to clarify the Rules was deemed correct, and no interference with the Tribunal's decision was warranted.