UNION OF INDIA Vs. DHAR TEXTILE MILLS LTD

JUDGEMENT

(1.) THE appellants - Union of India and Commissioner, Central Excise and Customs, Indore, have filed this appeal under Section 35g of the Central Excise Act, 1944 against the decision dated 23-9-2004 of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, in Appeal No. E/296/04-NB (A) by which the appeal has been dismissed on the ground that the Revenue did not challenge the findings of the Commissioner (Appeals) on merits and the only ground raised was that the demand Under Section 11a of the Central Excise Act was not time barred. Though this appeal was admitted on several questions raised in the appeal memo, the parties hereto agree that the only question, in the light of the finding arrived at by the Tribunal, that arises for determination in the present case is whether the Tribunal committed an error of law in holding that there was no challenge to the order of the Commissioner (Appeal) on merits although in the appeal memo filed by the Revenue, the order of the Commissioner (Appeals) was challenged on several grounds on merits. We, therefore, proceed to decide this case on the following substantial question of law : Whether the order of the Tribunal is vitiated on account of being grossly perverse in holding that the Revenue did not challenge the order of the Commissioner (Appeals) on merits?

(2.) THE learned Asstt. Solicitor General has invited our attention to the copy of the appeal memo that was filed before the Tribunal. In this appeal memo several grounds have been raised touching the merits of the case. The grounds of appeal read as under : The Order-in-Appeal passed by the Commissioner (Appeals) is not legal and proper in view of the following : chapter Note 3 of Chapter 52 of the Central Excise Tariff Act, 1985 (5 of 1986) deals with the matter. For convenience of reference Chapter Note 3 is reproduced below :

(3.) IN relation to products of heading Nos. 52. 07, 52. 08 and 52. 09, bleaching, olyeing, printing, water proofing, shrink proofing Organdie processing or any other process or any one or more of these processes shall amount to manufacture. Further, Entry No. 13 of exemption Notification No. 9/96-C. E. , dated 23-7-96 as amended exempts Woven Fabrics of Cotton filling under Chapter Heading No. 52. 07, 52. 08 or 52. 09 of the CETA when subject to the process of "flannellete raising" which is one of the processes mentioned in Chapter Note No. 3 of Chapter 52 under the expression "any other process". This indicates that "flannellete raising" amounts to manufacture as per Section 2 (f) of the Central Excise Act, 1944 in relation to goods falling under Chapter Heading Nos. 52. 07, 52. 08 or 52. 09 of the Central Excise Tariff Act, 1985. Further, as per Explanation II of Notification No. 29/96-C. E. (NT.) dated 3-9-96 as amended "for removal of doubts, it is clarified that the provisions of this Notification shall not apply where processed fabrics itself is used as an input for further processing". In view of this explanation, flannel cloth being itself processed fabric, benefit of Notification No. 29/96-C. E. (N. T.) dated 3-9-2006, as amended cannot be availed. In the instant case, the Noticee had wrongly availed the benefit of Notification No. 29/96-C. E. (N. T.) dated 3-9-96 as amended by misdeclaring the flannel fabrics (processed fabrics) as "grey Flannel". This fact is very clear as the declaration filed by them on 14-10-98 under Notification No. 27/92-C. E. (N. T.) dated 9-10-92 proves mis-declaration on the part of the Noticee. Invokation of extended period of limitation in this case is, therefore, justifiable. This issue has been decided by the Larger Bench of the Hon'ble Tribunal in its order in the case of , Nijam Sugar Factory v. Collector of Central Excise, Hyderabad reported in. , 2003 (89 )ECC873 (Tri ), 1999 (114 )ELT429 (Tri-Del ). For reference purpose relevant para of the said order is reproduced below :