Custom, Excise & Service Tax Tribunal
Geetanjali Woolens Pvt Ltd vs Vadodara-Ii on 18 July, 2018
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Appeal No. C/420/2008-DB
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
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Appeal No. C/420/2008
(Arising out of OIO No. 02/Commr/CUS/VDR-ii/08-09 dt. 16.07.2008
passed by the Commissioner of Central Excise & Customs, Vadodara)
M/s Geetanjali Woolen Pvt. Ltd. : Appellant (s)
Vs
Commissioner of Central Excise
& Customs, Vadodara : Respondent (s)
Represented by:
For Appellant (s) : Shri Paritosh Gupta, Shri Amal Paresh Dave, Advocate For Respondent (s): Shri S. N. Gohil, AR CORAM :
Dr. D. M. Misra, Hon'ble Member (Judicial) Mr. Devender Singh, Hon'ble Member (Technical) Date of Hearing: 02.04.2018 Date of Decision:18/07/2018 ORDER No. A/11456 / 2018 Per : Dr. D. M. Misra This is an appeal filed against OIO No. 02/Commr/CUS/VDR- ii/08-09 dt. 16.07.2008 passed by the Commissioner of Central Excise & Customs, Vadodara.
2. Briefly stated the facts of the case are that the appellant an 100% EOU are engaged in the manufacture of Yarn, Shoddy Blends, Blends, Mutilated Rags, Process Waste and Clips falling under Chapter sub-heading various chapters of CETA, 1985. During the relevant period, the imported mixed woollens/synthetic rags falling under Customs Tariff Heading No. 6309.00 and manufactured mutilated rags, clips blends and waste obtained by sorting/mutilating/cutting were cleared to DTA as per the permission granted by the 2 Appeal No. C/420/2008-DB Development Commissioner. Alleging that these goods were not excisable since the process to which the imported mixed woollen/synthetic rags were subjected, did not amount to manufacture and also these goods did not figure in the first schedule to the CETA, 1985. They had wrongly paid the duty on the DTA clearances of mutilated rags in terms of Notification No. 23/2003-CE dated 31.03.2003. It was alleged that the provisions of Notification No. 52/2003-Cus dated 31.03.2003 as amended were attracted in respect of DTA clearances of mutilated rags. Consequently, the appellant are not liable to the Notification No. 52/2003-CE dated 31.03.2003. Thereafter, the periodical show cause notice was issued to the appellant for the period from October 2004 to November 2005 demanding differential duty on the rags cleared to DTA by availing exemption Notification No. 23/2003-CE dated 31.03.2003. On adjudication, the demands were reduced and confirmed with interest. No penalty was imposed. Aggrieved by the said order, the appellant filed appeal before the Tribunal and the majority held that since the findings of the Commissioner that the process of conversion of un- mutilated worn clothing into rags resulted into manufacture, was not challenged by the department, the findings had attain finality for the period from March 2005 and onwards for the period October 2004 to November 2005. The matter was remanded to the original authority after applying the judgements of the Tribunal. On denovo adjudication, the Ld. Commissioner has confirmed the demand of differential customs duty cess and handloom cess amounting to Rs. 34,04,3017/- for the period 11.10.2004 to 28.02.2005 with interest. Hence, the present appeal.
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Appeal No. C/420/2008-DB
3. Ld. Advocate Shri Paritosh Gupta for the appellant has submitted that by majority the Tribunal has held that after 01.03.2005 since "Rags" find a place in the CETA at 63.10, therefore, demands after 01.03.2005 has been set-aside and for the period prior to 01.03.2005, the matter was remanded to the adjudicating authority to re-examine the issue in the light of various judgements, principles of law settled in this regard. The Ld. Advocate assailing the order of the Adjudicating Authority has submitted that the Ld. Commissioner in the impugned order held that since rags was not mentioned under a specific tariff heading prior to 01.03.2005, therefore, even though the process of judicial of rags resulted into manufacture, but the same cannot be treated as an excisable goods. He has submitted that there was a transition from 6 digit tariff to 8 digit tariff w.e.f. 01.03.2005. There is not dispute of the fact that after 01.03.2005 used or new rags found a specific mention under chapter heading No. 63.10 of CETA. It is his contention that on transition 6 digit to 8 digit tariff, not new product has been added which is clear from the Circular issued by the Board bearing No. 808/5/2005-CX dated 25.02.2005. Further, he has submitted that the said Circular has been interpreted by the Hon'ble Bombay High Court in the case of ECO Valley Farms & Foods Ltd. Vs. CCE, Pune-III - 2013 (290) ELT 49 (Bom.). The Ld. Advocate as per the submitted that rags an excisable products as all allegation been acknowledge by the department as is evident by reading various exemption notification issued by the Board by time to time. The Ld. Advocate has submitted that rags do find place in the said notifications. Further, he has submitted that rags is an excisable commodity has been held by the Hon'ble Andhra Pardesh High Court 4 Appeal No. C/420/2008-DB in the case of Narayan Venkat & Company vs. State of Andhra Pradesh
-1988 (33) ELT 327 (A.P.) and by the Bombay High Court in the case of Punjab Business and Supply Co. Pvt. Ltd. Vs. State of Maharashtra
- 1978 (2) ELT (J 646)(Bom.) and by the Tribunal in the case of Modi Cloth Mills, Modinagar vs. Collector of Central Excise, Meerut - 1986 (24) ELT 157 (Tribunal).
4. Per contra, the Ld. AR for the Revenue reiterated the findings of the Ld. Commissioner. He has submitted that since there was no specific entry assigned to rags prior to 01.03.2005, it cannot be considered as excisable goods accordingly the benefit of exemption Customs Notification No. 53/2003-Cus dated 31.03.2005 is not applicable. In support, he has referred to the judgement of the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Vapi vs. Global Health Care Products - 2015 (322) ELT 365 (S.C.), and the Tribunal in the case of Collector of Central Excise, Ahmedabad vs. Amol Decalite Limited - 1999 (105) ELT 222 (Tribunal).
5. Heard both sides and perused the records. The short question need to be answered in the present Appeal is: whether the rags are eligible to the benefit of exemption Notification No. 23/2003-CE dated 31.03.2003. In the impugned order, the Ld. Commissioner observed that since rag was not specifically mentioned in the Central Excise Tariff Act, 1985, prior to March 2005, hence, even though it results out of process of manufacture, cannot be considered as an excisable goods and consequently not eligible to the benefit of notification. The Ld. Advocate for the appellant has submitted that even though rags were not explicitly mentioned under the Tariff Act, however, rag has 5 Appeal No. C/420/2008-DB been considered as an excisable goods. In support, he has referred to the Notification No. 6/88-CE dated 19.01.1988 and Notification No. 103/93-CE dated 27.12.1993. Further, he has submitted that the Hon'ble Bombay High Court in the case of Punjab Business and Supply Co. Pvt. Ltd. Vs. State of Maharashtra - 1978 (2) ELT (J 646)(Bom.) held that rags and chindies are excisable goods. The second argument is that in the 8 digit tariff entry, a specific mention was made to the commodity rags, but, such specific incorporation could not plead to interference that rags were not earlier considered as excisable goods under the 6 digit tariff. He has submitted that while switching over from 6 digit tariff to 8 digit tariff, the Board's Circular has clarified that no new commodity would be inserting under the 8 digit tariff vide Circular No. 808/5/2005-CX dated 25.02.2005. In support, he has also referred to the judgement of the Hon'ble Bombay High Court in the case of ECO Valley Farms & Foods Ltd. Vs. CCE, Pune-III - 2013 (290) ELT 49 (Bom.). We find force in the contention of the Ld. Advocate for the appellant. Rags was not a new commodity since from time to time various exemption notifications were issued recognizing rag as an excisable commodity. Further, in the judgement of the Bombay High Court in the case of Punjab Business and Supply Co. Pvt Ltd's case, rag has been considered as a commodity following under the first schedule to the Central Excise Act, 1944. Besides, the Ld. Commissioner has dropped the demand for the period after 01.03.2005 held that rag has been specifically included in the 8 digit tariff. Following the principle laid down in ECO Valley Farms & Foods Ltd's case and the Circular of the Board dated 25.02.2005. We are of the view that by switching over from 6 digit to 8 digit tariff, no new 6 Appeal No. C/420/2008-DB commodity has been introduced under the 8 digit only existing commodities were classified in a paper manner and mentioned in the 8 digit tariff. In this scenario, we are of the view that rag as an excisable goods, accordingly, eligible to the benefit of the notification. The impugned order is set-aside and the appeal is allowed.
(Order pronounced on 18/07/2018)
(Devender Singh) (D. M. Misra)
Member (Technical) Member (Judicial)
G.Y.