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TMI Blog2003 (7) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... not referred to the section notes and tariff notes and the terms of the notification involved in the matter and had also not categorically examined the evidence on record pertaining to time-bar. The appellants had contended that raising of duty demand on them does not arise as doubling of yarn did not amount to manufacture till the date of passing of Finance Bill, 1995. The Tribunal also going by this submission, had held that this was the position of law in terms of the Finance Bill and, therefore, the Commissioner had committed an error in confirming the duty till the date on which tariff Note (3) to Chapter 54 was introduced. The assessee had also submitted that they had received the single yarn for the process of doubling from M/s. Superfils Products under Rule 57F(2) on job work basis and returned the same under cover of documents, therefore, the question of raising demand on them did not arise. The Tribunal noted that the Commissioner had not entered into any finding on this aspect and, therefore, the matter was required to be examined from the original records and findings recorded on this aspect. Appellants had also contended that M/s. Superfil Products Ltd., who were su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce had undergone further process of needling to bring into existence the goods, namely, felts . The Tribunal noted the argument of DR that both fabric and felt are different products. It observed that even going by this argument, the Revenue s case appears to fall to the ground because fabric had already come into existence. It was observed that multifilament yarn, had been cleared which, according to appellant, is duty paid and cleared for manufacture of this intermediate product, namely, fabric before it underwent the process of manufacture of felt . Therefore, the Tribunal noted that even going by the definition of Fabric and Felt appearing in S.B. Sarcar Book of Words and Phrases and the judgments referred to by DR, both the items are recognised as different items. The Tribunal also noted that the issue was settled by the judgment of Porritts Spencer (Asia) Ltd. v. State of Haryana, 1983 (13) E.L.T. 1607 (S.C.) wherein it had been held that fabric and felts fall within the same category of Textiles . The Bench also noted that even in the case of Delhi Cloth General Mills Co. Ltd. v. State of Rajasthan Others - 1980 (6) E.L.T. 383 (S.C.), the Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, no evidence of process of weaving is available to hold that the multifolded yarn supplied by M/s. Super Associates had been used in the manufacture of woven fabrics . He also noted that in terms of the judgment of the Apex Court rendered in the case of CCE v. Dhiren Chemical Industries - 2002 (139) E.L.T. 3 (S.C.), the intermediary product had been cleared at NIL rate of duty and not of appropriate rate of duty and, therefore, the benefit of Notification was not available. 4. As regards the issue of time-bar, the learned Commissioner admitted the letters dated 25-11-91, 9-3-93 and 1-4-94 addressed to the Superintendent, Central Excise, Ponneri Range by M/s. SFPL. However, he has now held that appellants had misstated/suppressed the facts and, therefore, larger period was invocable. 5. We have heard ld. Advocate, Shri S. Ignatius, for the appellants and Smt. R. Bhagya Devi, ld. SDR, for the Revenue. 6. Ld. Advocate submitted that the Commissioner has clearly admitted about the three letters which were addressed to the department. He also drew our attention to the letters addressed to the Superintendent by M/s. Superfil Products Ltd. on 1-4-94 giving all the particulars in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier judgments in the case of Porrits Spencer (Asia) Ltd. v. State of Haryana - 1983 (13) E.L.T. 1607 (S.C.) and that of U.O.I. v. Gujarat Woollen Felt Mills - 1977 (1) E.L.T. (J 24) as held in Para 15. The Apex Court had clearly held that both these cases dealt with certain varieties of felts . In the Gujarat Woollen Felt Mills case, the question before the Court was whether non-woven felts manufactured out of woollen fibres by machine-pressing were woollen fabrics for the purpose of levy of excise duty under Entry 21 in Schedule I of Central Excise Act. It was held that the expression fabric took in only woven material and hence non-woven felts made out of woollen fibres were not woollen fabrics . The Apex Court in Para 16 held that in the case of Porritts and Spencer (Asia) Ltd. v. State of Haryana (supra) was wholly different. In that case, it was contended that dryer felts made out of cotton or woollen yarn by the process of weaving according to the warp and weft pattern and commonly used as absorbents of moisture in paper manufacturing units fell within the ordinary and common parlance sense of the word textiles in item 30 of Schedule B to the Punjab General Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing upon them to pay duty. As they were under the bona fide belief that the notification in question was applicable to them, therefore, they were not liable to pay duty. He submits that there was no mis-statement or suppression of facts. Hence the larger period was not invocable. He clarified that the Commissioner s reliance on Nizam Sugar Factory - 1999 (114) E.L.T. 429 is not applicable as in that case there was suppression of facts while it is not so in the present case. In view of above submissions and the judgments referred to, ld. Counsel prayed that the appeals be allowed by setting aside the impugned order. 7. Ld. SDR reiterated the findings given by the Commissioner. She submitted that the appellants ought to have taken out licence and paid duty after informing them if they were not eligible for the benefit of notification in question in view of change in tariff, as per department s letter dated 25-1-96. As they had not complied with the terms of the letter, therefore, larger period was invocable. She submitted that as they had not complied with the terms of law and hence the Commissioner s finding should be sustained and appeals should be dismissed. 8. On a careful co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of doubling of fabrics amounted to manufacture and hence he has held that demands will take effect only from the date of introduction of Note (3) to Chapter 54 and demands from 23-2-94 to 25-5-95 has been held to be not sustainable. As we have held that appellants are eligible for the benefit of Notification No. 35/95 till Board had clarified vide circular dated 19-4-96, therefore, the appellants were not liable to pay duty. 9. Insofar as the aspect of time-bar is concerned, in the present case, the demands have been raised from 13-12-1995 to 5-6-97 and the show cause notice has been issued on 25-5-98. We notice that the appellants had sent three letters dated 25-11-91, 9-3-93 and 1-4-94 which have been acknowledged and replied by the Commissioner. Ld. DR pointed out to these three letters which pertained to the period prior to introduction of tariff Note (3) and in any case no duty was leviable for that period and hence there is no consequence arises from these letters. However, after the tariff Note (3) to Chapter 54 was introduced, the appellants had filed a detailed letter and format on 1-4-94. The range Superintendent has received the same and by his letter dated 25-1-96 h ..... 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