STANDARD NIWAR MILLS Vs. CCE, KANPUR

JUDGEMENT

(1.) THE issue involved in this appeal, filed by M/s. Standard Niwar Mills, is whether they were eligible to pay duty of excise on the basis of Annual Capacity of Production under Section 3A of the Central Excise Act, read with Rules 96ZQ of the Central Excise Rules and whether demand for duty can be raised by the Commissioner without challenging the Final Order passed earlier?

(2.) SHRI V. Lakshmikumaran, learned Advocate, mentioned that the Appellants are engaged in the processing of cotton fabrics as Independent Textile Processors; that under their letter dated 28.12.98 addressed to the Assistant Commissioner, they indicated their intention to install a Hot Air Stenter of two Chambers and as per direction of the Assistant Commissioner under letter dated 31.12.98, filed a declaration on 31.12.98 giving the details of Hot Air Stenter installed by them; that as the said declaration was not in proper form, the same was filed in proper form on 11.1.1999; that they informed the Superintendent about payment of compounded levy in January and February; that the Commissioner, under Order No. 4/99, dated 26.2.99 provisionally determined the annual production capacity and the duty liability per month per chamber; that the Superintendent visited their factory on 12.4.99 alongwith Shri C.B. Gupta, Professor Textile Chemistry, Govt. Textile Institute, and a Panchnama was drawn; that thereafter, the Commissioner, under Order No. 58/99 dated 2.6.99 determined their annual capacity of production to be Rs.375.12 lakhs in terms of value and monthly duty liability to be Rs.2 lakhs per chamber.

(3.) THE learned Counsel, further, contended that the show cause notice was issued on account of Circular dated 16.7.99 to the effect that hot air stenter should have insulation; that the action, if any, on the basis of Circular could only be prospective and cannot be retrospective; that inspite of the denial by the Commissioner the proceedings were initiated on the basis of Circular only as the Commissioner had never earlier raised any dispute regarding insulation. He also mentioned that a Panchnama was drawn after the visit of the technical expert drafted by the Department; that it has been clearly explained in the Panchnama that Cotton cloth is being processed in the factory and it is being dried through the stenter; that the cloth is held by the clips on the chain which is passed through the stenter; that moisture to the cotton cloth is provided by steam; that the clips hold the cloth and stretch is during the trave; that the cloth is dried in the second chamber; that because of the steam the fabric is getting moist and because of the heat it is getting dried up and obtained at the delivery end; that the authorities were fully aware of the fact that the insulation was not found inside the machine and Shri Gupta, technical expert, explained that the heaters installed in the machine in front of the blower was drying the cloth which was duly stretched inside the machine. He also contended that reference to I.S. Glossary of Terms does not in any way subscribes to the views of the Commissioner; that Note 1 states that attachment may be by Pins or clips; Note 2 indicates the uses to which machines are put to, namely,