9911796707
TMI Blog2007 (10) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 E/147/06 2000-01 to 2003-04 4. M/s. N. Gopinarayanan Textiles 42/05 dt. 28.11.05 80,59,614 80,59,614 E/143/06 2000-01 to 2003-04 5. M/s. M. Ramanathan & Sons 43/05 dt. 29.11.05 69,96,796 69,96,796 E/146/06 2000-01 to 2003-04 6. M/s. M. Ramanathan & Co. 43/05 dt. 29.11.05 15,54,715 15,54,715 E/145/06 2000-01 to 2003-04 7 (i) M/s. K.P. Mathurai & Co. (ii) M/s. K.M. Krishnan Tex. (Respondents) 82&83/06 28.04.06 24,00,482 5,26,276 24,00,482 5,26,276 E/646/06 April, 03 to March 2004 2. Common facts of the case are that the appellants got bed linens and towels woven by power loom owners. They paid for the job done by the weavers on piece rate basis. These made up articles were made using the yarn supplied by the appellants. The weavers did same work for other yarn suppliers also. One of the two appellants involved in each order and the order in appeal started functioning in 2003-04 and used the brand name of the much older and established firm. The persons owning the parent firm (partner, proprietor) and the new firm started in 2003-2004, were close relatives of each other such as father and son. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for defects. Defective towels/bed sheets were sold as seconds. The weavers were not paid for such pieces. On receipt of the towels/bed sheets with the loose yarn tied at both warp ends, they were affixed with stickers by stitching or pasting. The stickers carried the brand name of CE. CE split their business and, another firm in the name and style of M/s. K. Ramachandra Textiles (KRT for short) was started in August,2003. Shri M. Kasilingam, father of Shri K. Ramesh, partner of CE was the proprietor of KRT. KRT engaged in the same activity as CE and sold bed linens and towels with the same brand name "SITA TEX", "CIMA TEX" and "KAASI FABRICS" and the same stickers. CE had not paid duty on clearances of bed linens and towels at any time during 99-2000 to 2002-2003, though it had crossed the aggregate value of clearances exempted under the SSI Notification in force in the respective years. During investigation on receipt of intelligence of evasion of Central Excise duty, statements were recorded from persons involved in various activities connected with the conversion of cotton yarn into bed linens and towels. The appellants initially admitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom M/s. K. Ramachandra Textiles along with appropriate interest and imposed equal penalty as the duty on M/s. K. Ramachandra Textiles. 6. We heard the arguments of the ld. Counsel for the appellants in appeals No. E/142 to 147/06 and respondents in revenue appeal No. E/646/2006. In addition to reiterating the grounds taken in the appeal, he submits that the order of the Commissioner (Appeals) impugned in revenue's appeal contained the best defence and arguments in support of the appeals they had filed. The Counsel took us through the above order in appeal. 6.1 The Commissioner had framed the following questions to be decided by him. (i) Whether the processes undertaken by the appellants amounted to manufacture and whether they were manufacturers for the purpose of central excise law; (ii) Whether the value of clearances of the two units could be clubbed together upto March 2004 for the purpose of deciding the eligibility for availing SSI exemption under Notification No. 8/03 CE dated 1.3.03 to those clearances; and, (iii) Whether the recovery of interest and imposition of penalties under section 11AC on both the appellants were just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b worker was an independent unit and there was no financial flow back between the customer and the job worker, the job worker was the manufacturer and not the customer who supplied the raw materials. 7. The department had not advanced any evidence to establish that the job worker was a dummy of the supplier of the raw materials. The job worker had his own factory, work force, plant and machinery and technical know how etc. In such circumstances the job worker was the manufacturer as held by the Tribunal in ORG systems Vs. CCE (1994 (73) ELT 450 (Tri.)). This decision was upheld by the Apex Court as reported in [1998 (102) ELT 3 (S.C)]. Accordingly, the Commissioner (Appeals) held that the appellants were not the manufacturers of towels and bed sheets they sold. The Commissioner found as incorrect the findings of the Additional Commissioner that the bed sheets and towels became marketable only after branding, labeling, packing and bailing. He found that the goods were bed sheets and towels even before the processes of labeling, packing and bailing etc were undertaken. In Markfed Vanaspathi and Allied Industries Vs. CCE, [2000 (116) ELT 204 (Tri-LB)], it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity to the bed linens and towels. This perception was fallacious. 11. The ld. SDR reiterates the arguments contained in the order of the original authority. 12. We have carefully considered the facts of the case and the rival submissions. We find ourselves in agreement with the findings of the Commissioner (Appeals) submitted by the ld Counsel. We agree with the Commissioner that suppliers of cotton yarn to job workers who converted the yarn into bed sheets and towels on payment of charges are not manufacturers of bed sheets and towels. The yarn loses its commercial identity and becomes bed linen / towel at the hands of the weavers who are independent entrepreneurs not subject to any control and superintendence by the appellants. Just like the women who tie knots at either end of the towels and bed linens for a payment, the weavers also work for a compensation paid by the appellants. They own the infrastructure to produce fabric and weave fabrics for any supplier of yarn. The persons who attend to the work associated with dyeing of yarn, weaving of yarn and tying of bed sheets/towels are independent operators, doing the work for a price. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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