Remanded

M/S. Om Textiles Pvt. Ltd. v. Commissioner of Central Excise

Bombay HC18 Mar 2006CEXA/1/2006

Case brief

AI extract

What is this about?

In a Central Excise appeal regarding duty determination based on stenter capacity, the High Court held that the Appellate Tribunal erred in ignoring the Supreme Court's mandate in SPBL Limited. The delegation of gallery length for chamber calculation to taxpayer objection only, thus directing reconsideration.

What did the court decide?

Order dated 21.7.2005 by the Tribunal is quashed and set aside; the appeal is restored to the Registrar's file for fresh consideration.

M/S. Om Textiles Pvt. Ltd. Vs Commissioner of Central Excise — Corruption | Bombay HC (2006)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J.

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CENTRAL EXCISE APPEAL NO.1 OF 2006

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M/s.Om Textile Pvt.Ltd. .. Appellant v/s. Commissioner of Central Excise, Belapur, Navi Mumbai .. Respondent

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Mr.Prakash Shah with Mr.Jitu Motwani i/by M/s.PDS Legal for the appellant.

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Mr.S.M.Shah with Ms.N.V.Masurkar for the respondents.

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CORAM : R.M. LODHA & J.P.DEVADHAR, JJ.

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DATED : 18TH MARCH, 2006.

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P.C.

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Heard Mr.Prakash Shah, the learned counsel for the appellant and Mr.S.M.Shah, the learned counsel for the revenue.

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The appeal gives rise to the following substantial questions of law:-

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(1) Whether the Tribunal was right in sustaining the demand on the length of the gallery contrary to the law laid down by the Hon'ble Supreme Court of India in the case of Commissioner of Central Excise v/s. SPBL

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Limited, reported in 2002 (146) ELT 254?

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(2) Whether the Tribunal was justified in sustaining the demand of duty on the length of gallery notwithstanding its contrary views regarding the maintainability of the appeal against the determination of the capacity?

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Since the controversy is covered by the judgment of the Supreme Court in the case of Commissioner of Central Excise, Jaipur-II v. S.P.B.L.Limited, 2002 (146) ELT 254, we decide the appeal at this stage itself.

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It is true that the order dated 12^th July, 1999 passed by the Commissioner of Central Excise, Mumbai-VI under Hot Air Stenter Independent Textile Processor Annual Capacity Determination Rules, 1998 (hereinafter referred to as `Rules, 1998') was not challenged by the appellant by pursuing independent and substantive proceedings. Admittedly no appeal lay from the order dated 12^th July, 1999. However, the appellant objected to the invocation of length of the gallery having no fan or radiator attached to it in counting the number of chambers in response to the show-cause notice dated 4^th January, 2000.

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That is what the appellant did in response to the showcause notice by raising the following objection:-

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“3.2 As regards the total length of the Galleries taken into consideration for the purpose of arriving at the total number of chambers installed in the factory worked out to 9.69 chambers and not 9 chambers. We are not inclined to agree with the inclusion of length of the galleries in the length of the chambers but never the less we may clarify that the length of galleries attached on exhaust heat and prevent hot air emission and avoid chemical fumes. It is not in dispute that the processing of fabrics can be undertaken even by removing the said galleries, but for environment purposes only, such galleries have not been removed by most of the Process Houses.”

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The Additional Commissioner of Central Excise by his order dated 20^th April, 2000 overruled the objection raised by the appellant and confirmed the demand raised under section 11A(1) of the Central Excise Act, 1944 read with Rule 96ZQ(5)(i) of the Central Excise Rules, 1944 and imposed penalty of Rs.8,06,856/- under Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944.

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Aggrieved by the order passed by the Additional Commissioner, Central Excise, Mumbai-VI on 20^th April, 2000, the appellant preferred appeal under section 35 of the Central Excise Act, 1944 to the Commissioner (Appeals). The Commissioner (Appeals) allowed the appeal and set aside the order passed by the Additional Commissioner, Central Excise by his order dated 4^th December, 2000.

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Aggrieved by the order dated 4^th December, 2000, the revenue preferred appeal before the Appellate Tribunal under section 35-B of the Central Excise Act.

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During the pendency of appeal, the Supreme court in the group of matters, Commissioner of Central Excise v. SPBL Ltd. (supra), decided on 17.9.2002 held that the length of galleries having no fan or radiator attached to it shall not be taken into consideration while counting number of chambers in each of hot air stenter.

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Obviously, in the light of the judgment of the highest court of the land in the case of SPBL Limited, the invocation of length of the galleries having no fan or radiator attached to it in counting number of chambers was rendered illegal.

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It is seen that despite the aforesaid law laid down by the Supreme Court in the case of SPBL Ltd., the Tribunal allowed the appeal and set aside the order of Commissioner (Appeals) on the ground that the order dated 12^th July, 1999 has attained finality.

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In so far as the present case is concerned, as indicated

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above, though the appellant did not challenge the correctness of the order dated 12^th July, 1999 in independent and substantive proceedings, in response to the show-cause notice, the appellant did raise objection to the correctness thereof. In our considered view, by the time the matter reached to the Tribunal, the law having been settled by the Supreme Court holding that the length of galleries having no fan or radiator attached to it cannot be taken into consideration while determining the numbers of chambers, the Tribunal was competent to consider and rather ought to have considered the applicability of law laid down by the Supreme Court in the case of SPBL Limited to the facts of the present case.

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In what we have said above, the questions are answered by observing that the matter requires reconsideration by the Tribunal.

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We, accordingly, quash and set aside the order dated 21.7.2005 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai-III and restore the appeal No.E/647/01 Mum, the Commissioner of Central Excise, Mumbai-VI v. Om Textile Pvt.Ltd., to its file for fresh consideration in accordance with law and the observations made hereinabove.

No costs.

(R.M.LODHA, J.)

(J.P.DEVADHAR, J.)

M/S. Om Textiles Pvt. Ltd. v. Commissioner of Central Excise

Case brief

What is this about?

What did the court decide?

M/S. Om Textiles Pvt. Ltd. v. Commissioner of Central Excise

Case brief

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What did the court decide?

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