9911796707
TMI Blog2005 (2) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No. 36/98-C.E. as amended by Notification No. 32/2001-C.E., and imposed penalty of equal amount thereof in terms of Section 11AC of the Central Excise Act and a penalty of Rs. 10 lakhs on its Director under Rule 209A of the Central Excise Rules, 1944 read with Section 38A of the Act and Rule 26 of the Rules. The benefit has been denied on the twin grounds that the appellant company has proprietary interest in M/s. Dhanesh Industries and M/s. Ruby Silk Mills who are primarily and substantially engaged in the spinning of yarn or weaving or knitting of fabrics and therefore, the appellant company does not fall within the meaning independent processor as per Explanation II to the Notification which defines independent processor as a ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s had been leased to M/s. Sonika Textiles, while the show cause notice has proceeded on the erroneous basis that in Ruby Silk Mills, the number of looms exceeds 12. The second contention of the appellant company is that there has been no contravention of clause 8(3) during the relevant period (May, 2001 to Feb., 2002) as they received fabrics which were already stentered, for the purpose of carrying out zero-zero process, and hence did not clear any unstentered fabrics in their factory. The further contention is that the demand is barred by limitation as the show cause notice has been issued beyond the normal period of limitation and there is nothing on record to establish wilful mis-statement or mis-declaration. 3. Replying to the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Of, relating to, or characteristic of an owner or ownership, (2) Of a product marketed under registered trade name. Webster s Third New International Dictionary defines proprietor as - 1. an owner or grantee of a proprietary colony; Proprietary 2. One who has the legal right or exclusive title to something whether in possession or not. Proprietary has been defined as one who has exclusive title to a thing, one who possesses the ownership of a thing in his own right - proprietor or owner . Applying the above definitions, in order to hold that Dhanesh Textile Industries Pvt. Ltd. has a proprietary interest in the partnership firms, the limited company itself must have exclusive title ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Mahadevia family. The Mahadevia family holds 60% of the shares of the appellant company and it has no interest whatsoever in Dhanesh Industries (partnership firm). Therefore, merely because Mr. Sukhdev Narang is Director in the appellant company as well as a partner in Dhanesh Industries, it cannot be held that the appellant company has a proprietary interest in Dhanesh Industries. 5. In the case of CCE, New Delhi v. Modi Alkalies Chemicals Ltd. [2004 (171) E.L.T. 155 (S.C.)], the Apex Court has held that pervasive financial and management control are prima facie indicators of interdependence. In the present case, material on record is not conclusive of financial and management control by Mr. Sukhdev Narang over the partnership f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or Mahadevia family. Therefore, the appellant company cannot be said to have any proprietary interest in M/s. Ruby Silk Mills. The allegation that the partnership deeds of Dhanesh Industries and Ruby Silk Mills were not registered does not assume any sinister proportions for the reason that the appellant company and the partnership firms were all in existence much prior to the issue of Notification No. 36/98, dated 10-12-1998 which is the first of the Notifications in dispute in this case and is, therefore, clear that neither the appellant company nor the partnership firms were created so as to fraudulently avail the benefit of the Notifications. Further, there is no provision in the Partnership Act for compulsory registration of a partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vits of the above mentioned 3 persons. There is no requirement in clause 8(3) of Notification No. 32/2001 that the stentering has to be carried out by the independent textile processor. In this view of the matter, we hold that the appellant company has not contravened clause 8(3) of Notification No. 32/2001. 10. For the above reasons, we hold that the appellant company is an independent processor eligible to the benefit of exemption under Notifications in question, set aside the impugned order and allow the appeals. 11. Since the appeals are being allowed on merits, we do not deem it necessary to record any finding on the further argument that the demand is barred by limitation. (Dictated in Court). - - TaxTMI - TMITax - Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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