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TMI Blog2000 (7) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-12-1995 read with corrigendum dated 4-12-1995. In the show cause notice dated 22-7-1996 demand of Rs. 6,27,599.68 and Rs. 1,25,520/- was made. Penal provisions were also invoked. Both the show cause notices were adjudicated by the Commissioner of Central Excise, Indore, who with regard to show cause notice dated 4-12-1995 confirmed the demand of Rs. 15,02,211.18. A penalty of Rs. 5 lakh was imposed. With regard to the second show cause notice dated 22-7-1996, duty of Rs. 7,21,739.63 was confirmed. In addition, a penalty of Rs. 2,50,000/- was imposed. 3. The matter was heard on 12-6-2000 when Shri G. Shiv Das, Advocate, appearing for the appellants, submitted that the cotton waste was not a manufactured product and there was no provision regarding the removal of waste cotton to the DTA in the import schedule. The cotton waste is not taken into account while determining the obligation of the 100% EOU. He also submitted that the 1995-96 Finance Bill was enacted on 26-5-1995 and thus no levy could be imposed prior to that date. In any case there was no duty on cotton waste after 31-7-1995 as exemption has been granted vide Notification No. 105/95-C.E., dated 1-8-1995. He referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing yarn waste and garnetted stock) 5202.10 - Yarn waste (including thread waste) - Other : Nil 5202.91 -- Garnetted stock Nil 5202.99 -- Other Nil 52.03 5203.00 Cotton, carded or combed Nil 52.04 5204.00 Cotton sewing thread 20% 52.05 Cotton yarn (other than sewing thread), containing 85% or more by weight of cotton - In or in relation to the manufacture of which any process is ordinarily carried on with the aid of power: 5205.11 -- Single yarn 20% 5205.19 -- Multiple (folded) or cabled yarn 20% 5205.90 - Other Nil 52.06 Cotton yarn (other than sewing thread), containing less than 85% by weight of cotton - In or in relation to the manufacture of which any process is ordinarily carried on with the aid of power: 5206.11 -- Single yarn 20% 5206.12 -- Multiple (folded) or cabled yarn 20% 5206.90 - Other Nil 52.07 Woven fabrics of cotton, containing 85% or more by weight of cotton 5207.10 - Not subjected to any process 20% - Subjected to the process of bleaching, mercerising, dyeing, printing, water-proofing, shrink-proofing, organdie processing or any other process or any one or more of these processes: 5207.21 -- Bleached woven f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease shall have immediate effect under that Act. The provision in a Bill in respect of which a declaration has been made under Section 3, aforesaid, was considered to be a declared provision. The effect of such a declaration was that, the declared provision was to have the force of law immediately on the expiry of the day on which the Bill containing it is introduced in the Parliament. The substitution of the tariff entries under Chapter 52 of the Central Excise Tariff as a part of 1995-96 Budget was not in the nature of a proposal to shift cotton waste from one tariff entry to another. Prior to these Budget proposals, there was no tariff entry for cotton waste. How thus could be a proposal to shift the tariff entry for cotton waste to another tariff entry. Cotton waste was specified under Heading No. 52.02 for the first time and the clause which introduced this heading in the tariff was covered by the declaration under the Act of 1931. Thus, the observations of the Supreme Court in the case of Pieco Electronics and Electricals Ltd. v. CCE, Pune, 1996 (87) E.L.T. 577 (S.C.), are not applicable to the facts of the present case. In the case of Pieco Electronics & Electricals Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 14-9-1999 [1999 (114) E.L.T. 917 (Tribunal) in Appeal No. E/1765/97-A with regard to the removals of goods by 100% EOU, the Tribunal agreed with the Commissioner of Central Excise that clearance of the goods without permission of the Development Commissioner to DTA will not absolve a manufacturer of duty liability on the products, so cleared. The Commissioner had held that proviso to Section 3(1) of the Act was a charging Section for 100% EOUs and there could not be two rates of duties - one for goods cleared with the permission of the Development Commissioner and another for the goods cleared without his permission. He added that duties are leviable as per the proviso to Section 3(1) to clearances to DTA by 100% EOUs notwithstanding the fact that the clearances made were without permission, since non-application of the said proviso will tantamount to rawarding an offender. Reference may also be made to the Supreme Court decision in the case of SIV Indus. Ltd. v. Commissioner of Central Excise & Customs, [2000 (117) E.L.T. 281 (S.C.) = 2000 (89) ECR 209 (SC)]. The Supreme Court had observed that the debonding and the permission to sell in India are two different things havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g System (HSN) at pages 729-730. It is explained that in general this heading covers waste cotton obtained when cotton is prepared for spinning or during operations, weaving, knitting etc. or from the garnetting of cotton goods. It thus includes : combing waste, usually referred to as comber noils; strippings recovered from carding or combing cylinders; broken fibres detached during the drawing process; fragments of shivers or rovings; carding fly; tangled yarn and other yarn waste; yarn and fibres resulting from the garnetting of rags. It is added in the explanatory notes that this waste may contain greasy matter, dust or other extraneous matter or may have been cleaned, bleached or dyed. It may be used for spinning or may serve for other purposes. This heading does not include carded or combed cotton waste which was classifiable under Heading No. 52.03. 9. Cotton waste is a manufactured product. In the case of Commissioner of Sales Tax, Bombay v. Bharat Petroleum Corpn. Ltd. and State of Maharashtra v. Pulgaon Cotton Mills Ltd., 1995 (77) E.L.T. 790 (S.C.) = 1992 (85) STC 220 (SC), the Hon'ble Supreme Court had held that the cotton mills could be said to manufacture cotton ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y could be considered as rubbish. 10. On limitation also, we agree with the view taken by the adjudicating authority. In the show cause notice dated 4-12-1995 duty was demanded for the period 1-5-1995 to 31-7-1995 within the normal period of limitation when read with the meaning of the relevant date in Section 11A of the Act. Although, the show cause notice was issued by the Asstt. Commissioner of Central Excise, the notice was answerable to the Commissioner of Central Excise; Indore. The corrigendum was issued on the same date i.e. 4-12-1995. The second show cause notice dated 22-7-1996 was issued by the Commissioner of Central Excise, Indore, for the period 16-3-1995 to 30-4-1995. The authorised signatory had admitted in his statement that no information about the clearance of soft cotton waste had been given to the Department. On the ground that the clearances of the soft cotton waste had not been disclosed to the Department, extended period of limitation was invoked. In reply to the show cause notice reply dated 27-1-1996, it was admitted that the cotton waste was excisable under Heading No. 52.02 and that as a result of the Budgetary changes in the financial year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re in the nature of scrap and could not be considered as manufactured items. In the case of Ahmedabad Mfg. Calico Ptg. Co. Ltd. v. CCE, Ahmedabad, 1994 (3) RLT 726 (CEGAT-D), the goods involved were slivers which were obtained by combing and carding machines. In the case of Techno Associates Indus. Pvt. Ltd. v. CCE, Indore, [1998 (99) E.L.T. 389 (Tribunal) = 1997 (23) RLT 684 (CEGAT], the Tribunal held that the garnetting of duty paid waste for obtaining yarn after removal of waste material, did not amount to manufacture. We do not consider that these decisions in any way advance the case of the appellants. 12. Other issues raised have also been discussed by the adjudicating authority with which we agree. The reduction in respect of the amount of over-billing has already been provided in para 14 of the adjudication order. 13. Thus, while with regard to the demand of central excise duty, we do not find any merit in these appeals, in the facts and circumstances of the case, the amount of penalty is reduced from Rs. 5 lakh to Rs 2.5 lakh (rupees two lakh and fifty thousand only) with regard to show cause notice dated 4-12-1995 and from Rs. 2.5 lakh to Rs. 1.25 lakh (rupee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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