TIRUPATI PRINTS Vs. COMMISSIONER OF CENTRAL EXCISE, SURAT

JUDGEMENT

(1.) In brief, the facts are that during the process of EA 2000 Audit by the Departmental Officers, it was observed that M/s. Tirupati Prints, 37 -40, GIDC, Pandesara, Surat (hereinafter referred to as unit for the sake of brevity) had shown receipt of job charges for pleating of grey fabrics under the head non -excisable job charges and had realized Rs. 15,03,391/ - in the year 2001 -2002, Rs. 13,06,216/ - in the year 2002 -2003, and Rs. 49,33,078/ - in the year 2003 -2004, respectively in their balance sheets. In view of Note 4 given in Chapter 54 of the First Schedule to the Central Excise Tariff Act, 1985, Department took the view that the said activity of pleating amounted to manufacture, and pleated fabrics were liable to Central Excise duty falling under Chapter Heading 5406.29 of Central Excise Tariff Act, 1985 as being covered under any other process. By virtue of exemption Notification No. 03/2001 -C.E., dated 1 -3 -2001 (S. No. 103) pleated fabrics manufactured out of processed fabrics on which the appropriate duty of excise has already been paid stood exempted from payment of duty. It appeared in the instant case that no duty had been paid on grey fabrics on which pleating had been done. Therefore, duty was payable. The show cause notice dated 16 -6 -2006 was issued demanding Central Excise duty under proviso to Section 11A(1) of Central Excise Act, 1944 along with interest under Section 11AB of the Act, ibid, proposing penalty under Rule 25 of Central Excise Rules, 2002 and Section 11AC of Central Excise Act, 1944, proposing for confiscation of finished goods under Rule 25 of Central Excise Rules, 2001/2002, and proposing for penalty upon Shri Sunil D. Balajiwala, Partner of the unit under Rule 26 of Central Excise Rules, 2002.

(2.) THE matter was adjudicated after issue of show cause notice and on appeal filed by the appellant, this Tribunal vide Order No. A/2512 -2513/WZB/AHD/07, dated 28 -8 -2007/28 -9 -2007 [2009 (234) E.L.T. 104 (Tri.)] remanded the matter to the original adjudicating authority. While remanding, the Tribunal took note of the process of pleating undertaken by the appellant as discussed in Order -in -Original as well as in the case of M/s. Ronuk Manufacturing Co. [2004 (174) E.L.T. 33 (Tribunal)]. It was observed that in case of M/s. Ronuk Manufacturing Co., the chemical examiner came to the conclusion that the pleating process did not amount to manufacture. However, the Tribunal took note of the fact that in this case, the name of the company was not given by the chemical examiner. Further, in the opinion given by Dr. R.S. Gandhi, ex -Director of MANTRA, he has observed that the pleating process did not amount to manufacture and was not permanent. Finally, the Tribunal observed that the dispute in the present case was not examined by the adjudicating authority by considering whether the pleating process undertaken by the appellant was temporary or permanent. Accordingly, the original adjudicating authority was directed to find out exact nature of the process being undertaken by the appellant and examine the same in the light of the above expert opinion.

(3.) AFTER remand, the Commissioner has passed the impugned order and the appellants are before us. The appellants made following submissions.