JAGDAMBA POLYMERS LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE appellants are aggrieved by the Order of the Commissioner of Central Excise, Ahmedabad who has confirmed a duty demand of Rs. 29,38,759/ - (Rs. Twenty Nine Lakhs Thirty Eight Thousand Seven Hundred and Fifty Nine Only) against M/s. Jagadamba Polymers Ltd. on the ground that they have set up/floated dummy units such as Mangal Plastics, Daksha Packaging, Shree Ayyappa Packaging etc. in Order to avail of inadmissible concessional rate of duty in terms of Notifications as applicable to SSI unit and has imposed penalty of Rs. 30 Lakhs on M/s. Jagadamba Polymers Ltd. as well as penalties of various amounts under the provisions of Rule 209A of the Central Excise Rules, 1944 on Director of M/s. Jagadamba Polymers Ltd. and the so called dummy units.

(2.) WE have heard both sides. We find that M/s. Jagadamba Polymers Ltd. was engaged in the manufacture of HDPE Tapes, fabrics and sacks from job workers who were availing the benefit of SSI Notification No. 175/86 -CE as amended. The department has classified the HDPE Tapes under Chapter 54 and fabrics under Chapter 59 of the Schedule of the C.E.T.A., 1985 while the Hon'ble M.P. High Court has in its decision in the case of Raj Pack Well Ltd. v. Union of India has held that such goods were required to be classified under Chapter 39 and in view of the exemption available under Notification No. 142/86 -C.E. upto 1 -3 -1988 and thereafter under Notification No. 53/88 -CE for goods falling under certain sub -headings of Chapter 39 (goods in question do fall within those sub -headings) there was no question of payment of any duty on the HDPE Tapes and fabrics. The decision of the M.P. High Court has been followed by the Tribunal in the case of Promact Plastics Pvt. Ltd. v. Collector of Central Excise .

(3.) THE facts of the present case are on all fours with the facts before the Hon'ble High Court and before the Tribunal in the case of Promact Plastics Pvt. Ltd. (cited supra). Since the question of payment of duty on the goods in question namely HDPE Tapes, fabrics and sacks does not arise by virtue of the fact that they are exempt from payment of duty as they are classifiable under Chapter 39, the charge of M/s. Jagadamba Polymers Ltd. having set up dummy units loses significance since the goods are exempted from payment of duty. We, therefore, set aside the duty demand raised on M/s. Jagadamba Polymers Ltd. and penalties on all the companies and allow these appeals.