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TMI Blog2009 (2) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... by Commissioner is also upheld. - Confiscation of land, building, plant and machinery is set aside. The appeal filed by the Revenue is allowed and the impugned order of the Commissioner (Appeals) dated 12-9-2003 is set aside and the matter is remanded to the Original Adjudicating Authority for a fresh decision in the light of our observations. - E/3826/2003 and E/255/2007 - A/477-478/2009-WZB/AHD - Dated:- 27-2-2009 - Ms. Archana Wadhwa, Member (J) and Shri B.S.V. Murthy, Member (T) Shri R.S.Srova, JDR, for the Appellant. Shri Anand Nainawati, Advocate, for the Respondent . [ Order per: B.S.V. Murthy, Member (T)].- M/s Jai Ambe Textiles were engaged in the processing of textile fabrics with the aid of power operated machinery including Hot Air Stenter. The Government of India introduced levy of Central Excise duty on the basis of Annual Production Capacity and appellants were covered by the scheme. Consequently as required under the provisions of Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules 1998, (for short Textile APCD Rules) appellants filed the declaration dated 23-12-1998 and based on the declaration, Annual Production Capac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted by them which resulted in issue of a show cause notice proposing to include the length of the drying cylinders for the purpose of fixation of APC for the period from 16-12-1998 to 30-4-1999 and confiscation of seized fabric during the visit and penalties etc.. The proposal in the form of show cause notice culminated In the Adjudication Order No. 8/2001 dated 20-7-2001 whereby the demand for duty with interest was confirmed, seized fabrics were confiscated, penalties were imposed and plant and machinery was also confiscated. An appeal filed against this Order, resulted in a remand order by the Tribunal on the ground that APC fixed by the Commissioner vide his impugned order dated 15-2-2001 had already been set aside and since the order dated 20-7-2001 relied upon the order dated 15-2-2001 for the purpose of APC, the Tribunal required the Commissioner to re fix the APC on the basis of the decision of the Supreme Court in Sangam Processors case. Thus there were two orders of the Tribunal remanding the cases to the Commissioner for afresh adjudication. The first order of the Tribunal is A/ C2/EB dated 5-10-2005 with reference to the Order in Original dated 23-12-2003 fixing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixation of APC itself, the proper course to be adopted was to file an appeal and therefore on this ground itself the appeal filed by the appellants has to be allowed. 5.2 The Commissioner in his impugned order has relied upon the observations of the Commissioner and justification for inclusion of the drying range for the purpose of APC in the Orders in Original dated 15-2-2001 and 23-12-2003 and this shows total non application of mind on the part of the Commissioner and he could not have relied upon the grounds adopted in orders set aside by the Tribunal on 5-10-2005. 5.3 The Revenue has failed to observe principles of natural justice and the documents, photographs and video cassette requested for by the appellants have not been given to them thereby depriving their right to defend their case properly. Since the APC fixation has been done on the basis of evidence of video graph and photographs, in the absence of their availability to the appellants to defend their case, APC cannot be revised. 5.4 In the absence of supply of documents like RG-1 register, lot register, photographs and video graphs, requested by the appellants, the confiscation of seized fabrics and imposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial year; and (vii) the total quantity of processed fabrics referred to in rule 2, cleared from the factory in the preceding financial year to the Commissioner of Central Excise (hereinafter referred to as the Commissioner), with a copy to the Assistant Commissioner of Central Excise. (2) on receipt of the declaration referred to in clause (1), the Com missioner shall take necessary action to verify its correctness and as certain the correct value of each of the parameters given in such declaration. The Commissioner may, if he so desires, consult any technical authority for this purpose. (3) the annual capacity of production of processed textile fabrics specified in rule 2 in respect of a factory of an independent processor shall be determined keeping in view the following factors, namely: (i) the number of chambers (of a hot-air stenter), each of which having a rail length of upto 3.05 metre on each side, installed in such factory shall be construed as one chamber and any fraction exceeding such rail length of any such chamber shall be computed on a pro r basis; (ii) the average value of the processed textile fabrics (per sq. m) referred to in rule 2 for such factory a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h automatically means that the annual capacity has to be fixed every year and it has to be based on production and clearance of the previous year in addition to the norms relating to machinery. Therefore the argument advanced by the learned advocate that the APC fixed 21-4-1999 is permanent does not follow from the rules and appellants have correctly filed another declaration on 1-4-1999. Therefore the APC order dated 21-4-1999 passed by the Commissioner relates only to the year 1998-1999 and for the year 1999-2000, the Commissioner was required to fix APC afresh. For this purpose after the declaration was filed on 1-4-1999 and visit of the officers on 30-4-1999, appellants filed a revised declaration on 4-5-1999 and they also filed a Chartered Engineer's certificate regarding drying range cylinder on 5-5-1999. These declarations, Chartered Engineer's certificate, verification report submitted by the field officers and the Commissioner's own personal visit form the basis for the order fixing APC for the year 1999-2000 passed by the Commissioner on 15-2-2001. This is not a revision of the order dated 21-4-1999 but a fresh order altogether. Therefore the arguments advanced by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present appeal has been passed. 7.5 The discussion above clearly shows that the Tribunal never went into the merits of the case. Whether the drying range cylinders are to be included or not has never been considered by the Tribunal. The orders have been set aside for totally different reasons and it is a settled principle that in remand proceedings, the authority to whom the case has been remanded is required to consider the issues as per the directions in the remand order. Therefore in the absence of the fact that observations of the Commissioner for inclusion of drying range has not been considered by the Tribunal at all, we do not find anything wrong if the Commissioner relies upon the observations of the Commissioner in the earlier O-in-O for his conclusions. The Hon'ble Gujarat High Court in C.C.E. Customs V. Chandubluiu Shiroya reported in 2009 (234) E.L.T. 24 (Guj.) observed as follows:- "9 The legal position of in this regard is, by now, well-settled. The giving of reasons in support of their conclusions by judicial, quasi-judicial and administrative authorities when exercising jurisdiction is imperative, in order to avoid any element of arbitrariness or unfairness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alaipur lndustñes Ltd., Yamunanagar v. CCE, New Delhi - 1984 (17) E.L.T, 378 (Tribunal) and CCE, Ahmedabads Trade Notice No. 25/1999 dated 1-3-99, 1 hold that the drying range cylinder are covered as per the said Explanation I of the APC Rules, 1998 and are to be taken into account for fixation of APC. Taking this into account and also decision dated 4-1-2001 of Larger Bench of Tribunal in the case of Sangam Processor, Bhilwara Ltd. v. CCL, Jaipur, I hold that APC fixed vide Order-Tri-Original dated 23-12-2003 and reproduced in para 8 above correct.' 7.7 He has not only relied upon the observations of the Commissioner in the previous order but has also explained the reasons for his agreement. Therefore we do not find any justification in the argument advanced by the learned advocate. 7.8 The next point advanced by the learned advocate is that their request for the following documents and photographs was not responded to by the Revenue and therefore on the grounds of non observance of principles of natural justice the appeal has to be allowed. The documents etc. requested by the appellants are as under:- "1. Video Cassettes clipping during the visit on 30-4-1999 2. Photogra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory where they found excess fabrics which were seized and also found that the appellants had failed to declare the drying range cylinders. In any case as already observed, the visit of the officers on 304.1999 is relevant only for the purpose of the offence case registered against the appellants and not for APC fixation. However it is relevant only because after the visit of the officers, the ap pellants filed a revised declaration on 4-5-99 and a Chartered Engineer's certificate on 5-5-1999. 8.2 First of all before considering the order it is required to consider undisputed facts. The undisputed facts are that the drying cylinders' range is installed at a distance of 3 feet from Hot Air Stenter. This has been confirmed by the Chartered Engineer's certificate dated 5-5-1999 and also the opinions of an other textile expert submitted by the appellants. The Chartered Engineer Shri Deepalc C. Shah in his opinion dated 5-5-1999 says that the length of drying range is 175 cms. It does not have mechanical or electrical drive. The cylinders are used for squeezing of water purpose and all the cylinders are having steam connection. Shri Ramesh Joshi, Professor of LD Engineering College ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the case of the Revenue even though Commissioner has mentioned photographs in his order. 8.5 The next point is the role of the drying range cylinders in the process. The appellants contend that the role of the drying range cylinder is not drying but only squeezing out water. The Commissioner has discussed the role of the drying range cylinders in his order which is reproduced below:- "I shall first examine the use of drying range cylinder in a processing unit. According to the textile technology, one of the simplest methods of drying by conduction is that of passing the cloth over steam heating cylinders known as cylinder drying. It is also called can drying or drum drying. The machine consists of hollow steam heated revolving drums or cylinders around which the cloth passes giving up its moisture as it moves forward. Steam under pressure is passed into the cylinders through the hollow frame work of the machine i.e. the special bearings known as doll heads and the nozzle of the cylinder steam condenses inside the cylinder as it gives up its latest heat when water evaporates from the wet cloth. This machine helps in drying and also heat setting and colour fixation to some ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants that water is squeezed out when the fabrics pass through the drying range cylinders. Squeezing out of the water and application of heat to anyone would definitely appear to be a drying process. If not drying, the drying range cylinder in this case definitely aids in heat setting or drying process for the stenter machine. Therefore the Commissioners conclusion that the drying range cylinders assisted the stenter machine in heat setting or drying and therefore the length of the cylinder has to be taken into account has to be upheld. 8.7 The next ground taken up by the appellants is that the machine is not attached to the stenter machine therefore the length cannot be included. This aspect "a word attached" was considered in Ballarpur Industries Ltd. Yamunagar v. CCE reported in 1984 (17) E.L.T. 378 (Tribunal). According to this decision physical attachment is not the criteria but should be considered from functional utility. In this case even though the drying range cylinder is not attached, the fact remains that the fabrics moved continuously from padding machine to the end. Therefore functionally it is definitely attached. Commissioner has visited the unit and he has obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Capacity is fixed on the basis of the parameters declared by you and verified by the Jurisdictional Assistant Commissioner." It is the appellant's submission that the annual production capacity could not have been revised in view of several CESTAT decisions wherein it has been held that Commissioner has no power to recall or review his own order and re-determine annual production capacity which has already been finally determined after taking into consideration all relevant facts. The following decisions have been cited in this regard (1) Pooja Castings Put. Ltd. v. CCE, Jaipur-I - 2004 (163) E.L.T. 356 (Tri. Del.) (2) Sunny Textiles Ltd. v. CCE, Hyderabad - 2006 (205) E.L.T. 518 (Tri. Bang.) (3) Arvind Refractories Put. Ltd. v. CCE, Jaipur-I - 2002 (148) E.L.T. 404 (Tri-Del.) (4) Nakaoda Steel Mills Pvt. Ltd. v. CCE, Jaipur - 2002 (150) E.L.T. 323 (Tri-Del.) 9.4 We find that the present order dated 21-4-1999 also has to be treated as final in view of the decisions cited by the learned advocate which are applicable on facts to the present case and accordingly the re-determination of annual production capacity by the Commissioner has to be set aside. Even though on merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses as to whether the department's case will stand without the documents requested for. A perusal of panchnama drawn on 30-4- 1999 shows that in the annexure to the panchnama a worksheet showing the details of excess and unaccounted stock of manmade fabrics has been attached. This worksheet shows the lot number as per the register, balance stock as per the lot register, physical stock noticed and excess stock found unaccounted. 10 lot numbers as per register have been listed and in respect of each lot, the panchas had found excess stock. It has to be noted that while arriving at the excess stock, the stock of fabrics lying in the whole of the factory lot wise has been taken into ac count. The appellants have not been able to explain how there could be excess stock as compared to the stock lot wise as per the register. The panchnama has not been disputed till date. The appellants did not seek cross examination of panch witnesses. The proprietor admitted the excess stock and the statement has not been retracted till date. Further appellants also have not explained why they found it impossible to defend theft case based on the advice of the Additional Commissioner who said that fres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether any appeal has been filed against the decision of the Deputy Commissioner finally fixing the APC on 16-2-2001. Therefore the confirmation of duty demand depends upon the final outcome of the fixation of APC by the Deputy Commissioner for the year 2000-2001. In any case the order of the Commissioner (Appeals) setting as aside the order of the Original Adjudicating Authority is not correct and therefore the matter has to be remanded back to the Original Adjudicating Authority who shall reconsider the issue. If the order of the Deputy Commissioner dated 16-2-2001 has attained finality, depending upon the outcome of appeals filed if any or if no appeal has been filed on the basis of the Deputy Commissioner's Order, the Original Adjudicating Authority has to pass a fresh order. Needless to say he shall take into account our observations in this order. Accordingly the appeal filed by the Revenue against the order of the Commissioner (Appeals) is allowed by way of remand to the Original Adjudicating Authority. 11. In view of the above discussions: 11.1 We uphold the APC fixed for the year 1999-2000 by the Commissioner in the impugned order. 11.2 The revision of APC fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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