SPBL LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The issue involved in this appeal filed by M/s. SPBL Ltd, is whether the man -made fabrics in stock as on 1 -3 -2001 with them was processed or not.

(2.) Shri K.K. Anand, learned Advocate, submitted that the appellants process man -made fabrics which attract levy of Central Excise duty under Sec. 3A of the Central Excise Act up to 28 -2 -2001; that with effect from 1 -3 -2001 the duty became leviable under provisions of Sec. 3 of the Central Excise Act on ad valorem basis; that the Revenue has demanded Central Excise duty and imposed penalty in respect of stock of 84,407.50 mts. with them as on 1 -3 -2001 treating them as unfinished fabrics. The learned Advocate, further submitted that the duty under Sec. 3A of the Central Excise Act is with reference to the factory and not with reference to the stage at which the goods attained finality after passing through the activity carried on by the factory; that further Notification No. 19/2000 -Central Excise, dated 1 -3 -2000 specifies the rate of duty in respect of processed textile fabrics manufactured or produced by an independent processor with the aid of hot air stenter; that the rate of duty prescribed in the notification is a compounded duty per chamber per stenter but while specifying the same, reference has been made to the measurement of 'processed fabrics' produced in the unit from such chamber/stenter; that therefore, it is obvious that the expression 'processed fabrics' means fabrics which have undergone the hot air stenter process; that the other processes carried out by them subsequently are not relevant for the purpose of levying the duty under Sec. 3A of the Central Excise Act; that the impugned quantity of goods had undergone through the process of hot air stenter before 1 -3 -2000 and as such it should be deemed to have discharged the duty liability and no further duty on clearance on or after 1 -3 -2000 is payable by them. He also contended that the question whether the goods have reached the final manufacturing stage or not is relevant only for the purpose of determining the duty liability under Sec. 3A of the Central Excise Act; that the basis of taxation under Sec. 3A of the Central Excise Act are on entirely different basis; that under Sec. 3A of the Act whether the goods have been manufactured or not, they are liable to duty if they have been specified under the said Sec. and if they have undergone the process mentioned in the notification. Learned Advocate also relied upon the Trade Notice No. 18/2001, dated 5 -3 -2001 issued by Commissioner, Vadodara [as reported in 2001 (129) E.L.T. T10] wherein it has been clarified that in respect of processed textile fabrics manufactured prior to 1 -3 -2001, since duty liability would have been discharged by 28 -2 -2001, on compounded levy basis, there is no further duty liability even if such fabrics are cleared on or after 1 -3 -2001 provided the duty liability has been discharged by 28 -2 -2001. Learned Advocate contended that as the impugned fabrics had been processed by them before 1 -3 -2001 and the duty had been discharged by them during the month of February, 2001, and as the ad valorem duty came into effect on 1 -3 -2000 only, the same cannot be applied to the goods manufactured prior to that date.

(3.) Countering the arguments Shri O.P. Arora, ld. SDR submitted that the impugned fabrics was not fully manufactured as admittedly the process of decatizing and folding were still to be carried out by the appellants on the said fabrics; that as per Fair Child's Dictionary of Textile, decatizing "is a method of sponging wool and worsted to set the width and length and to improve the luster, hand and finish"; that thus it is apparent that the fabrics cannot be said to be ready for marketing without the process of decatizing; that duty under compounded levy scheme would deemed to have been paid only when the fabrics was processed completely; that as the fabrics was still to undergo some processes, it cannot be deemed to have suffered the duty on or before 28th February, 2001; that the Trade Notice No. 18/2001 of the Vadodara Commissionerate relied upon by the learned Advocate also refers to the processed fabrics and not to incomplete fabrics. He relied upon the decision in the case of Pratibha Silk Mills v/s. CCE, Vadodara [1989 (39) E.L.T. 118 (Tri.)] wherein it has been held by the Tribunal that accounting of production of processed fabrics is made only after folding and measurement. Reliance has also been placed on the decision of Bhagat Ram Agarwal v/s. CCE, Hyderabad [2001 (136) E.L.T. 637].