Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of C. Ex. vs Hyderabad Polymers (P) Ltd. on 25 February, 1998
Equivalent citations: 1998(104)ELT787(TRI-CHENNAI)
ORDER T.P. Nambiar, Member (J)
1. This is an appeal filed by the appellant against the orders passed by the Commissioner. In terms of the impugned order, he held that the appellants are manufacturing tubular fabrics on circular looms, but the fabrics so manufactured is not sack. He held that sewing of sacks from the cut pieces of fabric without the aid of power would not fall in the category of manufactured sacks with the aid of power. He, therefore, held that such sacks are eligible for Notification No. 65/87. He also held that the demand is barred by limitation.
2. In the appeal grounds, the department has stated that the appellant is not entitled for the benefit of Notification and they are not entitled for the benefit of time bar.
3. The learned JDR stated that the sacks manufactured from cut pieces of fabrics without the aid of power is entitled for the benefit of notification, is not correct. He stated that if the tubular fabric is manufactured on circular looms with the aid of power and if the cut pieces of fabrics is stitched, then the sack is manufactured with the aid of power. It was his contention that the manufacture of tubular fabric on circular loom is only a part in the manufacturing process of HDPE sacks. In this connection, he drew our attention to our Order No. 2884/97, dated 29-10-1997, wherein, at Para 3, this Bench of the Tribunal held as follows :
"3. We have earlier taken a view that the sack as such does not get manufactured on the circular looms. But these are manufactured out of the Tubular Fabric which is manufactured on the circular looms and once the goods are manufactured out of the tubular fabrics manufactured on the circular looms, the mischief of the explanation to the notification would come into play. The Notification has clearly set out that HDPE sacks which are manufactured on the circular looms will not be eligible to the benefit of Notification No. 223/86. We have observed that to give a meaning to the notification it has to be read in a manner taking into consideration the manner in which sacks can be manufactured on the circular looms. If the literal meaning is adopted, then the sacks themselves should be manufactured on the circular looms, and in that event the exclusion which is provided will become redundant as the sacks as such cannot be directly manufactured on the circular looms as the very name suggests on the looms only fabric can be manufactured, since the looms are used for manufacture of fabrics only. The notification has to be interpreted in a manner so that it advances the legislative intent and not to frustrate it. Going by this logic, we are of the view that the ld. Lower authority has rightly interpreted the notification and we therefore hold that there is no force in the plea of the appellants and the appeal is dismissed."
4. But, the learned Advocate, Shri K.R. Natarajan, stated that the tubular fabrics is not connected with the manufacture of sacks. He reiterated the reasonings in the impugned order.
5. We have considered the submissions of both the sides. We find that we have taken the view in the above cited decision to the effect that when tubular fabrics are manufactured on circular looms and from those tubular fabrics if the sacks are manufactured, the appellant is not entitled for the benefit of Notification 223/86. The same analogy applies to the facts of this case and, therefore, we hold that the appellant is not entitled for the benefit of the above said Notification i.e. 65/87-C.E., dated 1-3-1987.
6. As far as the time bar is concerned, the learned Collector in Para 11 of the Order held as follows :-
"11. On the question of time bar, I agree with the noticee, that having issued a demand in 1988 on similar issue and for identical amount, the question of suppression or misdeclaration would not arise. I also agree with the contention that approval of classification list is a quasi judicial function to be done after making suitable enquiries by the Adjudicating Authority. There would therefore be no question of getting the classification list approved and it is rightly an order of the Assistant Collector. Later, even the RT 12s have been finally assessed. There is as such no misdeclaration or suppression on the part of the noticee."
7. The learned JDR pointed out that in this case the appellants have suppressed the fact from the department that the HDPE woven sacks are manufactured without the aid of power. He stated that the respondents has mislead the department by stating in the classification list that HDPE woven sacks are manufactured without the aid of power.
8. But, the learned Advocate pointed out that there is a Trade Notice No. 1/89 dated 5-1-1989, which reads as follows :
"A doubt has arisen as to whether the product tubular HDPE woven fabrics coming out of the circular loom is classifiable under Heading 54.08 before lamination or under Heading 58.06 as special woven fabrics or under Heading 63.01 as made up textile articles not elsewhere specified.
2. It is observed that the tubular HDPE fabrics do not appear to be classifiable under Heading 58.06 inasmuch as the above fabrics do not have any special weave or construction to merit classification as special woven fabrics under Heading 58.06. It has a warp and weft as in the case of other fabrics and the only difference is that it emerges from the loom in a tubular form. Similarly, the above product may not merit for classification on under Heading 63.01 because it does not have the essential characteristic to contain anything inside to be called as sacks, and hence it may not be called as made up article.
3. Keeping in view the above grounds, it has been decided that the tubular HDPE woven fabrics coming out of the circular loom or cut-piece thereof are correctly classifiable under Heading 58.08 of Central Excise Tariff."
He stated that in view of this Trade Notice, it cannot be said that there was an intention to evade payment of duty. He also reiterated the reasonings in the impugned order.
9. We have considered the submissions of both the sides. We find that in the classification list, the appellant had stated that they are manufacturing the sacks in question without the aid of power. But it is seen that they have manufactured the tubular fabrics on circular looms, which is only a part in the manufacturing process of HDPE sacks. The use of power in the manufacture of tubular fabrics on circular looms, was suppressed from the notice of the department.
10. The learned Advocate stated that once if the classification list is approved by the department, it cannot be said that there was any wilful suppression. In this connection, he relied on the decision of the Supreme Court reported in 1988 (35) E.L.T. 605 (S.C.). In that particular decision, their lordships at Para 7 held that right from 1962 the assessee was filling description of the items and showing them as liable to amount of excise duty under Item No. 26AA and these lists were accepted and approved by the excise authorities. In those circumstances, it was held that there was no suppression or mis-statement of facts. In that particular case, there was a clear description by the appellant that the item was classifiable under 26AA, but there was no suppression of fact involved in this case.
11. In this particular case, the appellant suppressed the actual fact of manufacturing of tubular fabrics in the circular loom with the aid of power, which is an integral part in the manufacture of the sacks. This is the suppression which they have committed in this case.
12. The learned JDR relied on the decision of the Tribunal reported in 1988 (38) E.L.T. 479 (Tribunal) and stated that non-disclosure of true facts amounts to wilful suppression.
13. It is, therefore, seen that when the appellants have suppressed this fact, it amounts to wilful suppression and the longer period is invokable in this case.
14. In the above view of the matter, we set aside the impugned order and allow the departmental appeal with consequential relief.