PADIYUR SARVODAYA SANGH Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) ALL the three appeals involve a common issue and are hence heard together and disposed of by this common order.

(2.) THE appellants herein who are a certified unit of the Khadi & Village Industries Commission, are engaged in the manufacture of Polyvastra in accordance with the Polyvastra Certification Rules, issued pursuant to Regulation 24 of the KVIC Regulations, 1958 and against a valid certificate. They have a factory with production facility upto the stage of Roving. Polyester and Cotton fibres in the ratio of 67:33 are mixed and subjected to certain processes such as Carding, Drawing, Combing and Roving with the aid of power in order to bring into existence Roving ends in Bobbins. The Roving ends are sent to various production centres and then onwards, sent to various individual spinners provided with Amber Charkas by the appellants for the purpose of spinning Polyester Cotton Blended Yarn in hanks. Charges for spinning at the rates specified by KVIC are paid to the appellants. It appeared to the department that the appellants were manufacturers of the blended yarn and that the various spinners residing in the village areas notified by the KVIC were hired labourers of the appellants. It is on this basis that a show -cause notice was issued to the appellants in November, 2001 demanding duty of Rs. 35,82,375/ -, applying the extended period of limitation, on yarn cleared without payment of duty during the period December, 1996 to September, 2001. The notice also proposed imposition of penalty. The demand was confirmed by the Commissioner of Central Excise, together with interest, and a penalty of amount equal to duty was imposed. This has given rise to Appeal No. E/212/2002.

(3.) WE have heard both sides. The Government has issued Notification No. 38/2007 under the provisions of Section 11C of the Central Excise Act, 1944. The notification provides as under: