Customs, Excise and Gold Tribunal - Mumbai
The Commissioner Of Central Excise vs Shilpi Prints on 26 May, 2004
Equivalent citations: 2004(170)ELT63(TRI-MUMBAI)
ORDER K.D. Mankar, Member (T)
1, This is a revenue appeal against the impugned order-in-appeal passed by the Commissioner (Appeals). Vide the impugned order-in-appeal the order-in-original demanding duty of Rs. 8,64,409/- was set aside. The demand was confirmed against the respondents on the ground that they had procured intermediate goods namely, POY/PFY from 100% EOU for converting the same into finished product for export. POY/PFY was cleared from the premises of the respondents in terms of procedure prescribed under Notification No. 49/94(NT) dated 22/09/94 Without payment of duty. It was alleged that, the said procedure is applicable to the manufacturer of the resultant export/product, which was processed fabrics. It was alleged in the show cause notice that the respondents were not the manufacturer of processed fabrics, and only the processed fabrics] was permitted to remove the intermediate product, used for making the processed fabrics without payment of duty in terms of the said notification. Consequently, it was alleged that the respondents were required to pay duty on the POY/PFY received in their premises duty free. The Commissioner (Appeals), however, disagreed with the proposition and set aside the order of the adjudicating authority. Hence, the revenue appeal challenging the order of the Commissioner (Appeals).
2. Heard the DR. The respondents are not present.
3. On going through the records of the case, we note that, the respondents had obtained duty free material namely, POY/PFY as alleged in the show cause notice against the CT-2 certificate issued in their favour. This implied that they would be using the said material for manufacturing of export. However, from the facts available on record, it appears that the respondents did no process the said material in their own premises, but removed the said POY/PFY to various job workers for texturising., weaving and subjecting the grey fabrics to processing and ultimately the processed fabrics were brought to the appellant's premises for cutting and packing and then exported. It was thus alleged that, the procurement of PFY/POY against the CT-2 was a misrepresentation and clearances of PFY/POY from the respondents premises in terms of Notification No. 49/94 CE(NT) was not permissible. Therefore, the respondents were asked to pay duty on the PFY/POY, which was not paid at the end of the supplier for the reason that, the procurement was made under a CT-2 certificate for converting the same into the export product.
4. The Commissioner (Appeals) has considered the matter and in the impugned order it has been held that, part of the PFY/POY was processed in the respondent's own manufacturing premises and the remaining portion was sent to outside parties/sister concerns for texturising on job work basis. It has also been brought on record that, processed fabrics, before exportation, were actually brought into the premises of the respondents and were finally cut and packed and ultimately exported therefrom. The Commissioner (Appeals) on analysing the concept of "manufacture" considered that the respondents are concerned with the manufacture of the exported goods in as much as, the final processes of "cutting and packing" being incidental or ancillary process to the completion of manufacture of the products, held the respondents to be the manufacturer. It is stated in the impugned order that, the processes carried out by the respondents viz., cutting and packing will have to be treated as manufacturing process of resultant products, since the goods are marketed in the cut and packed form.
5. After considering these observations of the Commissioner (Appeals) and noting the fact that the end result of the entire activity was exportation of the processed fabrics and use of duty free material sourced through CT-2 in manufacturing the export product is not in dispute, the demand of duty cannot be sustained. It is nobody's case that, PFY/POY procured by the respondents was not used in the export products. Once this is established, the objection to the effect that procedures envisaged under Notification No. 49/94-CE(NT) not being applicable for such duty free removal will also be of no significance. We note that, the respondents could have effected the removal for job work through job work mechanism by preparing challans in appropriate formats. Besides, we also note that, the cut and packed processed fabrics, having been actually exported from the premises of the respondents and the process of cutting and packing being incidental and ancillary to the completion of manufacturing process in respect of processed fabrics, the respondents can also be covered under the category of the ultimate exporter. In the absence of an allegation that the duty free material was not used in the export product, we feel that there is no case for demanding duty as pleaded in the revenue's appeal.
6. Accordingly, we are of the view that the impugned order does not require to be interfered with. Consequently, the appeal of the revenue is rejected.
(Dictated in Court)