Customs, Excise and Gold Tribunal - Delhi
Knit Foulds Pvt. Ltd. vs C.C.E. on 10 August, 1999
Equivalent citations: 1999(66)ECC680, 2000ECR573(TRI.-DELHI)
ORDER V.K. Agrawal, Member (T)
1. This Appeal has been filed by M/s. Knit Foulds Pvt. Ltd. against the Order-in-Appeal dated 24.9.91 passed by the Collector (Appeals), Chandigarh.
2.1 The facts in brief are that the Appellants had claimed exemption from payment of duty of excise in respect of leather belting, leather Nylon Sand-witch belting, leather goods, i.e. leg guards, leather laces, gloves leathers, upholstery, drawing leather, Hides in dressed states, industrial leather, combing leather, Gill box leather, leather Nylon, Nylon condensor Tapes under Notification No. 115/75-CE dated 30.4.75 being products of goods manufactured in a factory of tanning industry. The Assistant Collector passed the following four orders:
(i) Order dated 30.4.81
(ii) Order dated 6.10.80
(iii) Order dated 23.7.81
(iv) Order dated 10.12.81 2.2 Under Order dated 30.4.81, the Assistant Collector denied the exemption under Notification No.115/75 to goods except Hides in dressed state and other industrial leathers. He disallowed the exemption under Notification No. 105/80 to the goods falling under item No. 68 of the erstwhile Central Excise Tariff Act besides changing classification of transmission conveyor elevator and denying exemption under Notification No. 80/80.
2.3 Similarly in adjudication Order dated 6.10.80, the benefit of Notification No. 115/75 was disallowed.
2.4 The Assistant Collector, under Order dated 23.7.81 confirmed the demand of duty amounting to Rs. 61,309.45 for the period from 22.4.80 to 5.6.80 and did not confirmed the demand for extended period.
2.5 Further under Order dated 10.12.81, the Assistant Collector confirmed the demand of duty amounting to Rs. 4,54,725.58 for the period from 5.6.80 to 22.5.81.
2.6 The Collector (Appeals), vide Order dated 14.12.83 which was passed in respect of first three adjudication orders, rejected the appeals filed by the Appellants. The Appeal against 4th adjudication Order dated 10.12.81 was also rejected by Collector (Appeals) under Order dated 30.12.82.
3. The Appellate Tribunal disposed of all the four Appeals filed by the Appellants under a common Order No. 1009 to 1012/1987-D dated 28.12.87. The Tribunal remanded the matter to the Assistant Collector with the direction that the issue regarding eligibility to the benefit of Notification No. 115/75 "has to be considered with reference to each of the products in the classification lists, in the light of our findings earlier." The eligibility for benefit under Notification Nos. 80/80 and 105/80 could be considered only after the eligibility for benefit under Notification No. 115/75 is decided.
4. The Assistant Collector re-adjudicated the matter under Order dated 15.5.89 in which he allowed exemption under Notification No. 115/75 in respect of Hides in dressed states; other tannery items like glove leather, leg guard leathers, etc., were not found to have been manufactured by the Appellants, confirmed the demand of Rs. 61,309.37 and Rs. 4,54,725.58 holding that no tannery item had been cleared on payment of duty; that benefit of Notification No. 115/75 cannot be extended to ready-to-use products manufactured out of finished leather since such products cannot be said to be the products of a factory in the tannery industry; that as all the 4 cases involved in the Appeals before the Tribunal were remanded for adjudication afresh, the contention of the Appellants that demand of duty prior to 9.6.80 could not be confirmed was not acceptable. On appeal, the Collector (Appeals) in the impugned Order dated 19.9.91, rejected the appeal.
5.1 Shri Vinod Agarwal, Ld Advocate, submitted that as far as the demand of duty is concerned, the findings of the Appellate Tribunal in their matter earlier (Order Nos. 1009 - 1012/87-D) were final as no appeal had been filed by the Department against the said order. He referred to paragraph 15 of the order which reads as under:
As earlier mentioned, two of the Orders-in-Original were on classification lists, the other two being on demands following the classification. So far as the demand dated 21.10.1980 the same has been confirmed only for a period of six months preceding the date of notice. The contention of Shri Agrawal is that the demands could be made effective only from the date of the orders as the classification list and demands could not be raised or confirmed for periods prior to the date of that Order. We are unable to agree to this view but held, as held in the case of Brakes India Ltd. (supra), that the demands could be made effective from the date of the show cause notice proposing the alteration in approval and could not be made effective for the period preceding the date of the show cause notice, since such prior removals were under approval granted on the earlier classification lists. That would mean the demand could be confirmed only from 9.6.1980 that being the date of the earlier show cause notice.
5.2 The Ld. Advocate contended that the Tribunal has clearly held that demands could be confirmed only from 9.6.1980 and as such any demand of duty prior to that date cannot be confirmed by the Revenue as that would be contrary to the order of the Tribunal; that it was not open to the Assistant Collector to reopen the concluded order.
6. Regarding eligibility for the benefit of Notification No. 115/75, the Ld. Advocate submitted that the goods merited exemption and the matter is covered by the decision of the Tribunal in the case of Nylon Laminated Belts (P) Ltd. v. C.C.E. wherein it was held that leather sandwiched belting, manufactured in a factory covered by the tanning industry " is eligible for Notification No. 115/75. He also referred to the letters of Central Leather Research Institute, District Industries Officer and Development Commissioner (Small Scale Industries) according to which the products manufactured by the Appellants were products of tanning industry. Finally he submitted that the Tribunal had remanded the matter with respect to the finished goods whereas the goods manufactured by the Appellants were belting and not belt.
7. Countering the arguments, Shri H.K. Jain, Ld. SDR, submitted that Notification No. 115/75 exempted the products manufactured in a factory covered by tanning industry; that tanning industry does not include leather goods industry and as the impugned goods were not manufactured in tanning industry, benefit of notification cannot be extended to these products; that none of letters referred to by the Ld. Advocate give any reasons for treating the Appellant's factory as covered by tanning industry; that Central Leather Research Institute in its letter dt. 31.1.1980, has clearly mentioned that the Tanners in Madras have diversified their production by manufacturing leather goods of various description; that this letter nowhere suggests that the impugned goods belong to tanning industry.
8. We have considered the submissions of both the sides. Notification No. 115/75-CE dt. 30.4.75 exempted goods falling under item No.68 of the erstwhile Central Excise Tariff and manufacture in factories covered by any of the Industries specified in the schedule. One of the industries specified in the schedule was tanning industry. The present impugned orders have been passed consequent to the remand order passed by the Tribunal. The Appellate Tribunal after referring to the Book titled "Leather Tanning Industry (All India)" being Small Scale Industry Analysis and planning Report No. 64 published by the Small Scale Industries Organisation of the Ministry of Industry, observed that "it may not be correct to hold that hides in dressed state alone would be products of a factory in that tanning industry but not finished leather products out of such hides in dressed state." The Tribunal after quoting from Glossary of Terms relating to Hides, Skins and Leather, came to the conclusion that tanned leather would include processed and finished leather and not merely hides in dressed state." The Tribunal also held that the benefit of exemption under Notification 115/75 cannot be extended to ready-to-use products manufactured out of finished leather since such products cannot be said to be products of a factory in the tanning industry. After recording the findings, the Tribunal observed that enumeration of the products in the classification list does not appear to make any distinction between finished leather and products manufactured out of finished leather, both being mixed up in several of the items; that "it will have to be further looked into, at the time of assessing the articles, whether each of the articles would fall under the category finished leather (entitled to exemption) or ready to use products manufactured out of finished leather (which would not be entitled to exemption)...composite products, even if they are not in the stage of ready-to-use consumer products, we are of opinion that they would not be entitled to benefit under Notification No. 115/75." The Tribunal, thereafter, held that so far as benefit of notification is concerned, the issue as to the eligibility thereof has to be considered with reference to each of the products in the classification list, in the light of the findings contained in the order. For this purpose the matter was remanded by the Tribunal. We find from the perusal of the Adjudication order passed by the Assistant Collector, on remand, that he had not discussed the eligibility to the benefit of Notification No. 115/75 with reference to each of the products in the classification list. As such the directions contained in the Tribunal's order dt. 28.12.1987 had not been carried out. For want of categorisation of the products mentioned in classification lists as per the findings of the Tribunal, it is not possible to come to the conclusion about the eligibility of the each product in question to the exemption provided in the Notification No. 115/75. We are, therefore, constrained to remand the matter to the Assistant Collector once again with the direction to give his findings about each of the products on the basis of principles laid down by the Tribunal in its Order dt. 28.12.1987.
9. As far as amount of duty is concerned, we find substance in the contention of the Ld. Counsel, appearing on behalf of the Appellants. The Appellate Tribunal in the order dated 28.12.1987 though did not agree with the submissions of the Appellants that demands could be made effective only from the date of the Order regarding classification, the Tribunal held, following the decision in Brakes India Ltd. v. C.C.E. Madras 1987 (14) ECC (T. 157), that demand could be made effective from the date of the show cause notice proposing the alteration in approval and could not be made effective for the period preceding the date of show cause notice, since such prior removal were under approval granted on the earlier classification list. This finding of the Appellate Tribunal was not challenged by the Revenue and as such it has become final and binding and accordingly the demand of duty could not be confirmed for a period prior to 9.6.1980, the day on which the show cause notice was issued. It was not open to the Assistant Collector to confirm the demand of duty of excise prior to 9.6.1980. The matter was remanded for fresh Adjudication with a view to ascertain the eligibility to the benefit of Notification No. 115/75 and thereafter the eligibility of Notification Nos.80/80 and 105/80. This does not indicate that demand of duty can be made for a period prior to 9.6.80. As far as the issue is concerned, the appeal is allowed.
10. In view of the decision above, the Assistant Commissioner is directed to consider the eligibility to the benefit of Notification No. 115/75 with reference to each of the products in the classification lists in the light of findings contained in Tribunal's Order No. 1009-1012/87-D dt. 28.12.87. The Assistant Commissioner thereafter will decide the eligibility for the benefit under Notification Nos. 80/ 80 and 105/80 and will redetermine the amount of duty payable, if any, with effect from 9.6.1980.
11. The appeal is thus disposed of in the above terms.