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TMI Blog2013 (9) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... fit of the Notification - The Circular also clearly shows why the Government did not think it fit to issue a Notification fixing any production capacity in the case of an open air stenter - This would also show that if a manufacturer had an open air-stenter in addition to hot-air stenter the capacity of production of textile fabrics would definitely increase. The whole purpose of the explanations was to clear any doubts that for heat setting and drying one should exclusively use hot-air stenter only and though one may have open air stenters installed in the process house they cannot be used for heat setting or drying but may be used for other process - Explanations to the rules and the notifications cannot be read in isolation of its purpose - Rule 96ZNA(1) wherein an independent processor of textile fabrics, who was engaged exclusively in the manufacture or production of processed textile fabrics “with the aid of a hot-air stenter”, was eligible for the benefit under the scheme - The reference to “independent textile processor” according to him refers to a processor who was engaged exclusively in the production of fabrics with the aid of hot-air stenter and no one else - The or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parent Notification No. 16/2001-C.E. envisaging the special procedure for compounded levy scheme during this notification itself. The said application was already filed by the appellant in the relevant form ASP-1 required on 18-5-2001. 2.2 The Commissioner has passed the order after a period of five months relying upon the subsequent Notification No. 32/2001-C.E. (which was introduced in between) which was not applicable at the time of the appellant s application at all. The Commissioner has then relied upon the subsequent Notification No. 41/2001-C.E., dated 14-9-2001 which stated that the accounting of investment in plant machinery has to be done as per the accounting standards (AS-10) as fixed by the institute of chartered accountants for computing the fixed assets. 2.3 Assuming that the AS-10 method was to be adopted even then the appellant cooperated all throughout and produced all the documentary evidence including the chartered accountant certificates certifying their investment in plant machinery not exceeding Rs. 3 crores as applicable under all the notifications as per AS-10 also. In fact the appellants and their CA has taken the original cost actually paid by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that appellants have submitted two certificates of Chartered Engineers certifying that no heat setting and drying was carried out in the open air stenter and processing of any fabrics cannot be done by merely having an open air stenter. He also submitted that the Commissioner has observed that appellant was doing drying in the open air stenter which was without any basis and based on his own assumption and therefore cannot be sustained. He also relied upon the decision of the Tribunal in the case of Standard Niwar Mills v. CCE, Kanpur - 2001 (132) E.L.T. 150 (Tri.-Del.) to submit that an open air stenter cannot be used for drying or heat setting in any manner. In this case it was also held that an open air stenter cannot be used either for drying or heat setting. 3.1 The Learned A.R. submitted that the Commissioner had got the verification of value of plant and machinery done by the Deputy Commissioner before coming to the conclusion and he had discussed the value of the machinery which was not declared and included while arriving at the value of plant and machinery by appellants. He also submitted that since the Hon ble Supreme Court had set aside the order of the Hon ble High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8400 2. Arpan Sales Parts 125000 125000 - 133750 8750 3. Sree Subhlaxmi Accessories 141480 139480 - 141480 2009 4. S.K. Engineering Parts 105040 90925 - - 14115 5. S.K. Engineering Parts 105040 90247 - - 11793 45058 (*Even though this can be excluded, this has not been done) According to the AS-10 also the actual expenditure incurred by the appellants on plant and machinery is required to be shown. AS-10 also excludes excise duty which is taken as Cenvat credit and if excise duty is excluded investment in respect of these disputed invoices comes down. Further we also noticed that an amount of Rs. 10,20,000/- has been added to the value of plant and machinery being the value of printing frames and printing screens. The learned Advocate submitted that both are consumables and have to be excluded. However we find that printing frames can be repeatedly used but printing screen for engraving can be used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said goods ) of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), with the aid of a hot-air stenter (hereinafter in this section referred to as independent textile processor ), makes in the proper form, an application to the Commissioner, in this behalf, the special provisions contained in this section shall, on such application being granted by the Commissioner, apply to such independent textile processor in respect of the said goods in substitution of the provisions contained elsewhere than in this section, subject to such conditions and limitations as hereinafter laid down. (2) The independent textile processor, who wants to avail the special provisions contained in this section for the period from 1st May, 2001 to 31st March, 2002, in respect of his processing factory existing as on the 1st May, 2001, shall make the application to the Commissioner of Central Excise in the prescribed format, by the 20th May, 2001. If such application made by the 20th May 2001 is granted by the Commissioner of Central Excise, the facility to avail the provisions under this section shall be deemed to be available from 1st May, 2001. Pending grant of such application by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be used for batching and steam being other process as done by us. So the whole purpose of the explanations is to clear any doubts that for heat setting and drying one should exclusively use hot-air stenter only and though one may have open air stenters installed in the process house they cannot be used for heat setting or drying but may be used for other process. We cannot read the explanations to the rules and the notifications in isolation of its purpose as otherwise the words in explanation II would have been no open air stenters should be installed in the factory of the applicant instead of (as used) no heat setting or drying is to be done on the open air stenters installed in the factory of the applicant IT ADMITTEDLY DOES NOT MEAN ONE CANNOT HAVE OPEN AIR STENTER IN THE FACTORY Hence the purpose of the rules which prevail as legislated and printed in the books state that only processing of such specified fabrics will be done with the aid of a hot-air stenter but does not mean no other machines to be used or open stenter but state that one should not do heat setting or drying in the open air stenter in the factory and so should do the same exclusively on h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01, 58.02, 5806.10, 5806.40, 6001.12, 6001.22, 6001.92, 6002.20, 6002.30, 6002.43, or 6002.93 (hereinafter in this section referred to as the said goods ) of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), manufactured or produced by an independent textile processor exclusively with the aid of a hot-air stenter (hereinafter referred to as independent textile processor ), and notifies the rate of excise duty as - (a) in the case of a processing factory whose average value of processed fabric is up to and including Rs. 30 per sq. mtr., Rs. 2.5 lakhs per chamber per stenter per month; and (b) in the case of a processing factory whose average value of processed fabric exceeds Rs. 30 per sq. mtr. Rs. 3 lakhs per chamber per stenter per month, installed in the processing factory, irrespective of whether such stenter or chamber is in use or not, or is in working condition or not. 2. For the purpose of payment of duty of excise, (i) In the case of a processing factory, existing as on 1st May, 2001, of an independent textile processor, the number of chambers of the hot-air stenter installed in such processing factory as on 1st March, 2001 or 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge, whereafter the Commissioner of Central Excise shall determine the date from which the change in the number of chambers shall be deemed to be effective : Provided that where any change in the installed machinery or any part thereof during a financial year results in the reduction in the number of chambers in a hot-air stenter or in the number of hot-air stenters, installed in the processing factory, no account of such reduction shall be taken into account for computing the duty payable under this notification during that financial year and the duty of excise shall be payable during that financial year as if no such reduction in the number of chambers or hot-air stenters had taken place. 6. For the purposes of this notification, (a) a chamber (of a hot-air stenter), having a rail length of up (a) to 3.05 meter on each side, installed in the factory of the independent textile processor shall be construed as one chamber and any fraction exceeding such rail length of any such chamber shall be computed on a pro rata basis; (b) a float drying machine or any other equipment, except the (b) galleries, of a length 3.05 meters installed in or attached to a stenter for aidi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I is similar to the explanation in the Rule. Further he draws our attention to the words in para-7 of the Notification reproduced above who is engaged exclusively in the manufacture or production of the said goods. The words the said goods mean the goods which are produced by an independent textile processor with the aid of hot-air stenter. Thus, para-7 of the Notification makes it clear that exemption is available for an independent textile processor who according to Notification is the one who is engaged exclusively in manufacture or production of goods with the help of hot-air stenter. He submits that in view of the above, whether open air stenter is not put to use for heat setting and drying by the appellants is not relevant. It is not the case of the appellants that an open air stenter has not been used by them. It is their contention that it is not used for heat-setting or drying which is not supported by the Notification and hence they are eligible. 6.6 Further he also submits that the rates of duties given in the introductory paragraph (a) (b) would also show that while prescribing the rate of duty, the Government have estimated the possible production per chamber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r can not be used for heat setting and drying, appellant cannot be said to be undertaking processes ineligible for exemption. There is no specific prohibition over possession of open air stenter. He also submits that an independent processor uses several ancillary machines besides the hot-air stenters and it cannot be held that the entire processing should also be done only by hot-air stenter which is not the purpose and cannot be. 7.2 We have considered his submissions. It is not the case of the appellants that a hot-air stenter is incapable of performing the function of heat setting and drying. When hot-air stenter can perform heat setting and drying besides stentering, the question arises why a manufacturer would do it in an open air stenter in addition. The answer to this is found in the decision of the Tribunal cited by the Learned Advocate and attached to the written submission. The decision was rendered in the case of Standard Niwar Mills v. CCE, Kanpur - 2001 (132) E.L.T. 150 (Tri.-Del). In this case the Tribunal was considering the predecessor notification which had provided the benefit of payment of duty on the basis of annual production capacity and the dispute was whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular that the hot-air stenter itself can perform the functions of heat setting or drying and manufacturer can do all the work an open air stenter can do by using hot air stenter and more. An open air stenter machine probably can perform only function of stentering. In this connection, the learned A.R. also submitted that the Notification itself provides that an independent textile processor shall not remove any unstentered textile fabrics from his factory. 8. The decision in the case of Standard Niwar Mills was cited by the learned Counsel to support his submission that having an open air stenter machine cannot lead to denial of the benefit to the appellants. We are not able to find any support to the appellants. The issue before the Tribunal in the case of Standard Niwar Mills was totally different one before us and we have already discussed the entire rules and notifications and have come to the conclusion and the interpretation of the Notification and Rules are correct and cannot be faulted that. Therefore the appellants have not been able to make out a case that they are eligible for the benefit based on annual production capacity in terms of Rule and Notification and henc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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