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TMI Blog2014 (10) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer’. Rather each ‘assessee’ has to be treated as a manufacturer and not the entire group of companies as claimed by the Revenue. In the present proceedings also even the demands have been issued by the Revenue to the individual assessee carrying out the exempted processes and not to the head offices of the group companies as a legal entity. Therefore, we are of the considered view that the word ‘manufacturer’ used in Sr.No.6 of the Notification No.30/2004-CE has to be interpreted as a unit where the ‘act of manufacture’ is being undertaken which is the individual factory and not all the factories of a group of companies. As appellants were filing periodical ER-1 returns claiming exemption under Notification No.6/2000-CE. As the words used in both the Notification No.30/2004-CE and Notification No.6/2000-CE are ‘in his factory’, therefore, appellants could have entertained a bonafide belief that words ‘in his factory’ used in Notification No.30/2004-CE means the ‘same factory’ and thus cannot be fastened with the tag of ‘with intent to evade duty’ for invoking extended period. Appellants obtained separate registrations for the manufacturing activity in each factory and wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i M. Chandrasekharan (Sr.Advocate) appearing on behalf of his clients argued that GSML have got 3 factories situated at Jolwa and Vareli. That factories of GSML situated at Jolwa are separately manufacturing POY and draw twisted Polyester Filament Yarn (PFY for short) and the third factory situated at Vareli is manufacturing, inter alia, draw wrap yarn. That all the 3 factories were earlier registered separately with the Central Excise Department. That subsequently, all the three separately registered factories were given a common registration as requested by his appellant and it was ordered by the Revenue that GSML will maintain separate records of production and clearance of excisable goods from the respective factories and that a single consolidated CENVAT/PLA account will be maintained for the purpose of discharging duty payments. That subsequently GSML requested for separate registration which was not allowed by the lower authorities but the order of lower authorities was appealed against and by an order dt.12.04.2005, Commissioner (Appeals) set aside the order passed by the Deputy Commissioner holding that GSML will be eligible for separate registrations for the 3 factories s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 but has to be construed in the context of the word 'manufacture' in common parlance as defined under Section 2(f) of the Central Excise Act 1944. That the word 'factory' as defined in Section 2(e) of Central Excise Act 1944 has to be read along with the definition of 'manufacture' given in Section 2(f) of the Central Excise Act and will mean only 'the same factory' of the manufacturer. That in the case of this appellant, all the units were treated as different factories as per the proceedings which terminated in the Apex Court. With respect to time bar nature of the demand and imposition of penalty it was argued by the Ld.Advocate that appellant was earlier availing the benefit of Notification No.6/2000-CE where rate of duty on the same activities carried out by this appellant was fixed at rate of ₹ 2.5 per kg and Notification No.6/2000-CE was also using the words 'his factory' and an 'independent texturiser'. That as this appellant was availing the benefit of similarly worded exemption notification, therefore, there was a bonafide belief that the words his factory used in Notification No.30/2004-CE only meant the 'same factory' where the exempted processes are being done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken. He relies upon the case law of Allahabad High Court in the case of Shahnaz Ayurvedics Vs CCE Noida [2004 (173) ELT 337 (All.)] to argue his point that circulars issued by CBEC are binding on the Revenue officers. Ld.Sr.Advocate also relies, inter alia, on the judgment of Mumbai High Court in the case of Raymond Ltd Vs UoI [2009 (240) ELT 180 (Bom.)] to argue that Notification No.30/2004-CE has to be read in view of the circulars issued by Joint Secretary TRU and the speech of the Finance Minister. It was strongly argued by ld.Sr. Advocate that the words all filament yarns procured from outside subject to any process by the manufacturer, who does not have the facilities in his factory (including plant and equipments) for the manufacture of filament yarn of Chapter 54, need not be on purchase basis as word procurement is much wider than purchase of goods. That the words 'his factory' used in Notification No.30/2004-CE thus denotes the same factory where exempted manufacturing activity is being undertaken. Shri V. Sridharan (Sr.Advocate) made the Bench go through the ordinance dt.24.11.1979, Notification No.297/97/79-CE, dt.24.11.1979, Budget proposal of 1995-1996, CBEC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs CCE Shillong [2001 (135) ELT 470 (Tri-Kolkata)] vi) Dalmia Industries Ltd Vs Collr.C.E. New Delhi [1996 (84) ELT 60 ((Tri-Del)] vii) V.P. Packaging Vs CCE Calcutta-I [2001 (137) ELT 583 (Tri-Kolkata)] viii) Reckitt Benckiser (India) Ltd Vs CCE Bolpur [2002 (147) ELT 616 (Tri-Kolkata)] ix) Goenka Wollen Mills Ltd Vs CCE Shillong [2001 (135) ELT 873 (Tri-Kolkata)] 3.2 Second alternative submission made by the ld.Advocate was that his clients were earlier availing the benefit of Notification No.6/2000-CE where similar words 'his factory' were used and concessional rate of duty was being availed. That appellant was under the bonafide belief that the words 'his factory' meant the same factory where exempted processes are being undertaken. That Revenue was well aware of the captive consumption of POY and the valuation done by his client as evident from the audit reports of audit of the appellant done from time to time. It was, therefore, argued by the Sr.Advocate that extended period of limitation is not applicable in these proceedings and no penalties under any of the provisions of Central Excise law are applicable to his clients, as his clients were under a bonafide belief tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 2.5 per kg was prescribed for texurised polyester yarn manufactured by independent texturiser under Notification No.6/2000-CE, as amended. It was his case that this notification only granted partial exemption to independent texturisers subject to the condition that this exemption was only meant for those manufacturers of texurised yarn who do not have the facility of manufacturing partially oriented yarn. That this exemption is admissible to a manufacturer as a legal entity who purchases yarn from outside and does not have facilities to make POY in any of his factories. It was strongly argued by the Special Counsel that interpretation of Notification No.30/2004-CE will have to be interpreted in the light of legislative intention and history of a manufactured product (texturised filament yarn) along with Finance Minister's speech in the Budget as well as budgetary clarifications issued by CBEC. Ld.Special Counsel made the Bench go through the Budgetary changes, CBEC Circulars and speeches of Finance Minister issued from time to time, to support his arguments and legislative intention behind Notification No.30/2004-CE. That as per the legislative history only independent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facility of manufacturing POY anywhere else' or 'has no proprietary interest in any other factory/factories' etc. He relied upon the Finance Bill dt.14.05.1979, read with Notification No.297/1979-CE dt.24.11.1979, Notification No.253/1982-CE, dt.08.11.1982, Notification No.6/2000-CE, dt.01.03.2000, CBEC circulars issued by Ministry for the years 1996, 2003, 2004 & Finance Ministers Speech while making Budget changes during the years 2003 & 2004. Advocates appearing on behalf of the other appellants also made similar arguments. The main thrust of the arguments made by the appellants is that if at one stage, Excise duty is paid then no further duty payment is required by the unit as per Para 4.8.1 of the D.O.F. No.334/3/2004-TRU, dt.08.07.2004 written by Joint Secretary (TRU) Ministry of Finance. 8.1 For better appreciation of this issue, the original text of relevant Sr.No.6 of the table annexed to Notification No.30/2004-CE, dt.09.7.2004 is reproduced below:- S. No Chapter or Heading No. or Sub-Heading No. Description of Goods 6. 54.02, 54.03 Yarns procured from outside and subjected to any process other than texturising, by a manufacturer who does not have the faciliti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g whether the words 'his factory' mean the same factory where exempted processes are undertaken or will also include all the factories owned by the manufacturer because the words like 'in the same factory' or 'his factory/factories' or 'manufacturer not having the proprietary rights in any other factory' etc. have been used by legislative in other exemption notifications. Shri V. Sridharan (Sr.Advocate) in his arguments, inter alia, also relied upon Sr.No.10 of the same exemption notification to argue that similar words 'his factory' have been used in Sr.No.10 but no demands are raised by the Revenue with respect to processes like carding, combining etc done by those manufacturers having facilities for producing goods of headings 55.01, 55.02, 55.03 & 55.04. 9.2 It is observed from the case records that following expressions have been used in the description column of Table to Notification No.30/2004-CE as amended, against Sr.No.6 (a) 'Yarns procured from outside' (b) 'Subjected to any process by the manufacturer' (c) 'Who does not have the facilities in his factory for the manufacture of filament yarns of Chapter 54' All the above three expressions used in Notification No.30/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, and the word 'manufacturer' shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account. 9.4 Under the Central Excise Taxation duty of Central Excise is levied on the 'act of manufacture' as defined in Section 2(f) of the Central Excise Act 1944 and the person who carries out the 'act of manufacture' is the 'manufacturer'. A manufacturer who is liable to pay duty becomes an 'assessee' by virtue of Rule-2(c) and has to take out a Registration as per the provisions of Rule 9 of the Central Excise Rules 2002. From the above basic elements of Central Excise law a 'manufacturer' is the person who carries out the 'act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit of this exemption and no objection was ever raised by Revenue that if appellants had more than one factories, having facilities of producing POY elsewhere, then exemption under Notification No.6/2000-CE will not be admissible. Further the words 'independent texturiser' was not defined in Notification No.6/2000-CE but the words 'independent processor' was defined as an Explanation in Sr.No.89 of the same notification as follows:- 89. 51.10 or 51.11 Fabrics woven on handlooms, namely:- (a) certified as 'khadi' by the Khadi & Village Industries Commission; or (b) processed without the aid of power or steam; (c) processed with the aid of power by a factory owned by a registered handloom co-operative society or any organization set up or approved by Government for the purpose of development of handlooms; or (d) processed by an independent processor approved in this behalf by the Government of India on the recommendation of the Development Commissioner for Handlooms. Explanation. - In this entry, for the purposes of the fabrics woven on handlooms, 'independent processor' means a manufacturer who is engaged exclusively in the processing of fabrics with the aid of power and who ..... 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