MATHANIA FABRICS Vs. COMMISSIONER OF CENTRAL EXCISE, JAIPUR

JUDGEMENT

(1.) THIS appeal at the instance of the assessee has come up by way of reference before the Larger Bench in view of the contention raised by the Revenue that the decision of this Tribunal in Kanti Prasad Tribrewala v. CCE, Mumbai -1999 (107) E.L.T. 190 (T) which is relied on by the appellant requires reconsideration.

(2.) CHALLENGE in this appeal is against the order passed by Commissioner of Central Excise dated 28 -3 -2001 confirming the demand of Central Excise duty to the extent of Rs. 71,09,050/ -. A redemption fine of Rs. 1 lakh and a penalty of Rs. 3 lakhs were imposed under Rule 173Q of the Central Excise Rules, 1944. The matter came by way of remand before the Commissioner as per Order Nos. 8 -10/2000 -D, dated 15 -11 -99 for deciding the case afresh on merits as well as on the question of limitation by observing the principles of natural justice. It was alleged in the show cause notice issued to the assessee that they had been carrying on the process of bleaching of grey cotton fabrics with the aid of power as lifting water from the underground tanks and pouring into kier and bleaching vessel was being done by using power. The provisions of Section 11A had been invoked on the ground that the assessee had suppressed relevant facts relating to using of power from the department. The fact that water from the underground tanks were being lifted and poured into kier and bleaching vessel is not denied. But the contention was that it would not amount to using - power in the manufacturing process. The Commissioner rejected the above contention following the ratio of the decision of the Supreme Court in CCE v. Rajasthan State Chemical Works -1991 (55) E.L.T. 444. The Commissioner also found that provisions of Section 11A were correctly invoked. The party had neither intimated the department about the process being carried on with the aid of power nor did they produce any records which would prove that the Central Excise Officers had visited their unit and witnessed this process. The Commissioner further found that the assessee had not been maintaining the statutory records and in the correspondence exchanged with the department at the time of obtaining Central Excise licence, they had failed to furnish information regarding use of power at any stage. For these reasons, the Commissioner took the view that the assessee had suppressed the vital information from the Department with intention to evade payment of Central Excise duty.

(3.) IN the above mentioned decision, a contention is seen raised by the appellant that the process of dyeing is undertaken without power and therefore, they are entitled to benefit of Notification No. 130/82 as amended by Notification No. 54/87 -C.E. According to the Revenue mixing of dyes was carried out with the help of electric stirrer by the assessee and therefore, it has to be taken that power was being used in the manufacture of or undertaking the process of dyeing. The Tribunal took the view that Notification exempts fabrics from duty except when the process was carried out with the aid of power or steam. The notification does not envisage use of power in or in relation to those processes. Therefore use of power in process incidental to or ancillary to the specified process, namely dyeing in the case concerned, will not make the assessee ineligible for the exemption. It was held that power had not been used in the process of dyeing although power has been used incidental or ancillary to dyeing, namely, mixing of dyes. If the dictum in he above decision is accepted there is no dispute that the appeal of the assessee is only to be allowed. But the learned Departmental Representative would contend that the above decision of this Tribunal is in direct conflict with the dictum laid down by the Supreme Court in CCE v. Rajasthan State Chemical Works. But according to the learned Counsel for the appellant, the above decision of the Apex Court cannot have any application to the facts of the present case since the Apex Court was interpreting a notification which examined the question whether any process was ordinarily carried on with the aid of power in or in relation to manufacture but in the present case the notification is differently worded. The exemption is unavailable only when the cotton fabrics are processed with the aid of power or steam. There is no reference to a process 'in relation to manufacture'.