Case Law Details
Dhanesh Textiles Industries Pvt Ltd Vs Commissioner of Central Excise Mumbai-V Commissionerate (Bombay High Court)
Bombay High Court held that identify the nature of the goods as to whether they are finished or semi finished based on the entries in the RG-1 register needs reconsideration by the Appellate Tribunal.
Facts- The Appellants are engaged in processing of fabrics on job work basis. Till 16 December 1998, the said processed fabrics were chargeable to duty at advalorem rates of 12% Basic Excise Duty. The Appellants are engaged in the processing of cotton fabrics and man made fabrics falling under Chapter 52, 54, 55, 58 & 60 respectively of Central Excise Tarrif Act, 1985 (“CETA”) and were holding valid C.Ex. Registration Certificate.
The Appellants’ stock of manufactured fabrics and semi-finished fabrics was ascertained by the Central Excise officers and got them recorded in the RG-1 register and the same was certified under the signature of the Central Excise officer. This was in the context of change in position of law, that till 16 December, 1998 processed fabrics were chargeable to duty at advalorem rates of 12% Basic Excise Duty u/s. 3 of the CEA read with the CETA. Post 16 December 1998, by virtue of Notification dated 10 December 1998 issued under Section 3A of CEA, the specified fabrics were brought under Compounded levy scheme. As per paragraph 2(a) of the said Notification, the scheme was not applicable to such goods produced or manufactured prior to 16 December 1998 and cleared on or after that date.
Accordingly to the Appellants, the Appellants held stock of 24,437.90 LM as on 15 December 1998 and 47,840.65 LM of semi-finished condition. As regards the cotton fabrics, the Appellants held stock of 74,699.50 LM manufactured and 1,15,744.55 LM semi finished condition. This according to the Appellants was the stock position held at 24:00 hrs on 15 December 1998 as per RG-1 Register. According to the Appellants, the Appellants had given break of the same as finished goods and balance was quantified as semi finished goods in the RG-1 Register and the aforesaid stock was declared under letter to the Superintendent, Central excise, Range-07, Division Goregaon, Mumbai.
The Appellants received show cause-cum-demand notice dated 30 September 1999 calling upon the Appellants to pay the amount of Rs.4,95,593 (in total). The Assistant Commissioner adjudicated the show cause notice and confirmed the demand.
The Commissioner (Appeals) held that it was an admitted position that the fabrics were semi finished and by order dated 28 August 2001, allowed the Appeal filed by the Appellants.
Conclusion- We have gone through the orders passed by the Commissioner (Appeals) and the Appellate Tribunal. Though there is an assessment of facts by both, the Commissioner (Appeals) and the Appellate Tribunal, it is quite clear that the basic position of law has revolved around the decision in the case of M/s. Vishnu Dyeing and Printing Works.
The Commissioner (Appeals) relied on the same in order to identify the nature of the goods as to whether they are finished or semi finished based on the entries in the RG-1 register. The Appellate Tribunal relied on its own decision in the same case to hold it otherwise. It is clear from the order of the Appellate Tribunal that the Appellate Tribunal has been heavily influenced by the decision rendered in the case of M/s. Vishnu Dyeing and Printing Works. Therefore, we are unable to accept the contentions of the learned counsel for the Respondent that the discussion of the Tribunal should be severed to uphold certain findings. Since the manner in which one of the main findings sought to be scrutinized is reversed, we have to accept the submission of the learned counsel for the Appellants that the matter needs reconsideration by the Appellate Tribunal.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. By this Appeal filed under Section 35C(1) of the Central Excise Act, 1944 (“CEA”), the Appellants seek to challenge the order passed by the Customs Excise and Service Tax Appellate Tribunal (“CESTAT”) dated 6 February 2008 setting aside the order passed by the Commissioner (Appeals) dated 28 August 2001 which arose from the order in original No. CEX/GD/254/2000 dated 16 August, 2000.
2. The question of law so framed arises for consideration in the following facts: The Appellants are engaged in processing of fabrics on job work basis. Till 16 December 1998, the said processed fabrics were chargeable to duty at advalorem rates of 12% Basic Excise Duty. The Appellants are having its factory and office at Goregaon (East), Mumbai. The Appellants are engaged in the processing of cotton fabrics and man made fabrics falling under Chapter 52, 54, 55, 58 & 60 respectively of Central Excise Tarrif Act, 1985 (“CETA”) and were holding valid C.Ex. Registration Certificate. The Appellants’ stock of manufactured fabrics and semi-finished fabrics was ascertained by the Central Excise officers and got them recorded in the RG-1 register and the same was certified under the signature of the Central Excise officer. This was in the context of change in position of law, that till 16 December, 1998 processed fabrics were chargeable to duty at advalorem rates of 12% Basic Excise Duty under Section 3 of the CEA read with the CETA. Post 16 December 1998, by virtue of Notification dated 10 December 1998 issued under Section 3A of CEA, the specified fabrics were brought under Compounded levy scheme. As per paragraph 2(a) of the said Notification, the scheme was not applicable to such goods produced or manufactured prior to 16 December 1998 and cleared on or after that date. Accordingly to the Appellants, the Appellants held stock of 24,437.90 LM as on 15 December 1998 and 47,840.65 LM of semi-finished condition. As regards the cotton fabrics, the Appellants held stock of 74,699.50 LM manufactured and 1,15,744.55 LM semi finished condition. This according to the Appellants was the stock position held at 24:00 hrs on 15 December 1998 as per RG-1 Register. According to the Appellants, the Appellants had given break of the same as finished goods and balance was quantified as semi finished goods in the RG-1 Register and the aforesaid stock was declared under letter to the Superintendent, Central excise, Range-07, Division Goregaon, Mumbai.
3. The Appellants received show cause-cum-demand notice dated 30 September 1999 calling upon the Appellants to pay the amount of Rs.4,95,593 (in total). The Assistant Commissioner adjudicated the show cause notice and confirmed the demand. The Appellants thereafter filed an Appeal before the Commissioner (Appeals) of Central Excise, Mumbai. The Commissioner (Appeals) held that it was an admitted position that the fabrics were semi finished and by order dated 28 August 2001, allowed the Appeal filed by the Appellants. The Commissioner (Appeals) also referred to a decision taken by him in the case of M/s. Vishnu Dyeing and Printing Works V/s. Commissioner of Central Excise 1.
4. Challenging the order passed by the Commissioner (Appeals), the Department filed an Appeal in the Customs, Excise & Service Tax Appellate Tribunal, Mumbai (“Appellate Tribunal”). The Appellate Tribunal referred to the fact that the Commissioner (Appeals) had relied upon the decision in the case of M/s. Vishnu Dyeing and Printing Works which decision was set aside by the Appellate Tribunal. Thereafter, the Appellate Tribunal proceeded to observe that the Respondent had failed to produce any evidence to show that the loose quantity reflected in the RG-1 Register consisted of grey fabrics which was yet to under go several process. The Appellate Tribunal also took a view that in case of textile process undertaken amounts to manufacture, no fabric can be considered as a semi-finished fabric and also once it is mentioned in the RG-1 Register, it will have to be considered as finished product. The Appellate Tribunal, accordingly, by order dated 6 February 2008, allowed the Appeal filed by the department.
5. Challenging order dated 6 February 2008, the Appellants are before us by this Appeal.
6. By order dated 27 August, 2008, the present Appeal was admitted.
7. Learned counsel for the Appellants submitted that the entire basis of the order passed by the Appellate Tribunal is based on the decision referred by the Appellate Tribunal in the case of M/s. Vishnu Dyeing and Printing Works. The learned counsel submitted that though there are other observations in the impugned order, the primary reason given by the Appellate Tribunal to interfere with the order passed by the Commissioner (Appeals) is the decision rendered in the case of M/s. Vishnu Dyeing and Printing Works which was the subject matter of Central Excise Appeal No.104 of 2007 filed in this Court. The Division Bench of this Court, by order dated 16 July 2008, had allowed the Appeal and by setting aside the order passed by the Appellate Tribunal remanded the same for reconsideration. The learned counsel submitted that upon remand, the Appellate Tribunal has rendered the decision in favour of Assessee therein. The learned counsel submits that the similar course of action needs to be adopted in the present case.
8. In view of this development, the questions of law are re-framed as under;
1. Whether the Judgment and order passed by the Appellate Tribunal needs to be re-considered ?
2. Whether the Appeal shall be sent for a fresh consideration in view of law laid down in the order passed by the Division Bench of this Court in the case of M/s. Vishnu Dyeing and Printing Works V/s. Commissioner of Central Excise (Central Excise Appeal No.104 of 2007) dated 16 July 2008.
9. The learned counsel for the Respondent submitted that even keeping aside the decision in the case of M/s. Vishnu Dyeing and Printing Works, it can be seen from the order passed by the Appellate Tribunal that the goods in question could not be considered as semi finished goods and this finding of fact should not be disturbed and thus supported the decision of the Appellate Tribunal.
10. We have gone through the orders passed by the Commissioner (Appeals) and the Appellate Tribunal. Though there is an assessment of facts by both, the Commissioner (Appeals) and the Appellate Tribunal, it is quite clear that the basic position of law has revolved around the decision in the case of M/s. Vishnu Dyeing and Printing Works. The Commissioner (Appeals) relied on the same in order to identify the nature of the goods as to whether they are finished or semi finished based on the entries in the RG-1 register. The Appellate Tribunal relied on its own decision in the same case to hold it otherwise. It is clear from the order of the Appellate Tribunal that the Appellate Tribunal has been heavily influenced by the decision rendered in the case of M/s. Vishnu Dyeing and Printing Works. Therefore, we are unable to accept the contentions of the learned counsel for the Respondent that the discussion of the Tribunal should be severed to uphold certain findings. Since the manner in which one of the main findings sought to be scrutinized is reversed, we have to accept the submission of the learned counsel for the Appellants that the matter needs reconsideration by the Appellate Tribunal.
11. In the light of the above, we have to remand the Appeal No.E/ 2985/01 & E/CO-277/02-Mum filed by the department for reconsideration and decision in accordance with law laid down by the Division Bench of this Court in Central excise Appeal No.104 of 2007 decided on 16 July 2008 and the observations made in this order.
12. We accordingly allow the Appeal in terms of re-framed questions of law which are answered in affirmative. Hence, we pass the following order;
ORDER
(i) The Judgment and order passed by the Appellate Tribunal dated 6 February 2008 is quashed and set aside.
(ii) Appeal No.E/2985/01 & E/CO-277/02-Mum filed by the department before the Customs, Excise & Service Tax Appellate Tribunal is restored to file.
(iii) The Appellate Tribunal will consider the Appeal a fresh in view of the observations made in this decision and the law laid down by the Division Bench of this Court in the case of M/s. Vishnu Dyeing & Printing Works Vs. Commissioner of Central Excise in Central excise Appeal No.104 of 2007 decided on 16 July 2008.
13. In the result, Appeal is allowed and disposed in the above terms.
Notes:-
1 2006 (198) ELT.478 (Tri.-Mumbai)
Author Bio
