Commissioner, Central Excise & Service ... vs M/S Mitesh Exim Ltd

Appeal No.E/997/2007-DB [Arising out of OIA No.205 & 206/2007(Ahd-I), dt.30.05.2007, passed by Commissioner (Appeals), Central Excise & Service Tax, Ahmedabad]

Commissioner, Central Excise & Service Tax, Ahmedabad-I Appellant

Vs

M/s Mitesh Exim Ltd Respondent

Represented by:

For Appellant: Shri Alok Srivastava, Authorised Representative For Respondent: Shri Paritosh Gupta, Advocate

For approval and signature:

Honble Mr. P.K. Das, Member (Judicial) Honble Mr. P.M. Saleem, Member (Technical)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of Seen the order?

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. P.M. SALEEM, MEMBER (TECHNICAL)

Date of Hearing/Decision:30.07.2015

Order No. A/11140 / 2015, dt.30.07.2015

Per: P.K. Das

Revenue filed this appeal against the order of Commissioner (Appeals), where the Adjudication Order was set aside.

2. After hearing both the sides and on perusal of the records, we find that the Respondents were engaged in the processing and clearance of Cotton Fabrics and Man Made Fabrics with the aid of power. On 26.02.2004, the Central Excise Officers visited the Respondents factory and noticed that during the period from December 2001 to February 2002, they received Grey Fabrics and after certain processes, sent the said fabrics to the job workers, who, after certain processes, returned back the goods to the Appellant and after processing the said fabrics at their factory, the Appellant cleared on payment of duty after availing deemed credit under Notification No.53/2001-CE(NT), dt.29.06.2001 and Notification No.6/2002-CE(NT), dt.01.03.2002. Show cause notice was issued on the ground that the Respondents contravened the provisions of Explanation-3 of the said notification, which reads for the removal of doubt, it is clarified that the provisions of this notification shall not apply where processed fabrics is used as an input for further processing.

3. According to the Revenue, the Respondents received the Dyed Fabrics from the job workers and therefore, they are not entitled to deemed credit and hit by Explanation 3 of the notification. We find that the Respondents initially received the grey fabrics and after intermediatory processes carried out by the job workers outside the factory, which were returned to them and after certain processes cleared on payment of duty by availing deemed credit. We find that this issue is no more res integra in view of the decision of the Tribunal in the case of CCE Ahmedabad Vs Balkrishna Textile Pvt.Ltd. [2004 (178) ELT 984 (Tri-Mum)] as under:

8. I have? critically examined the issue. In this case, notification does not define as to what is the scope of the term input. The respondent is a manufacturer of processed fabrics. Therefore, grey fabric is an input, which is received from his customers. He then subjects this inputs to partial processes within his factory. The remaining processes are undertaken in the outside premises and such, further processed fabrics are again received back into the respondents factory for carrying out the ultimate and remaining processes. Throughout these transactions, the initial grey fabric continues to be an input. The respondents are not receiving partly processed fabrics in their factory as initial input. The input was received by them initially in the form of grey fabrics only, from the respective customers. Therefore, the second entry of part processed fabrics from the job workers premises cannot be treated to be the entry of a different input than the input which was initially received from the supplier (Customer). In other words, in my view, the second time entry (re-entry) cannot be treated as a receipt of input for the purposes of Explanation-II. In my view the Explanation-II can apply only where there is a direct supply from the customers to the respondents in the form of partly processed duty paid fabrics. In this case, the respondents having received grey fabrics initially, notwithstanding the intermediate processes carried out by the job workers outside the factory, such intermediate processing and receipt of such processed fabrics would not come in way of availment of deemed credit.

9. The view as? proposed in the revenue appeal will lead to total discrimination between the processors who complete the entire processing of fabrics from grey stage as against the processors who form out a part processing work to outside parties. It is also a fact of life that due to controls imposed on industrial pollution, the processors are required to restrict the processing operations to certain processes only and send out the fabrics outside the factory for remaining or intermediate processing. Washing of dyed/printed and bleached fabrics, has to be localised in certain areas only. Therefore, the law should not be interpreted in favour of the fortunate ones, who have the entire range of processing facilities within their factory. On the principle of equity, the tax result should be the same, whether or not the processing is integrated or unintegrated.

4. The Tribunal dropped the demand on the identical issue in the following cases:-

i) Anant Polyester Pvt.Ltd. Vs CCE Ahmedabad-I Final Order No.A/918-919/WZB/AHD/09, dt.20.05.2009

ii) CCE Ahmedabad Vs Balkrishna Textile Pvt.Ltd.

2004 (178) ELT 984 (Tri-Mum)

5. In view of the above discussion, we do not find any reason to interfere the order of Commissioner (Appeals). Accordingly, the appeal filed by the Revenue is rejected.

(Dictated & Pronounced in Court)

(P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial)

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