Tribunal ruling on textile processing units, exemption eligibility, duty demand, and "manufacture" definition

COMMR. OF CUS. & C. EX., PUNE Versus SWASTIK DYEING & BLEACHING FACTORY

COMMR. OF CUS. & C. EX., PUNE Versus SWASTIK DYEING & BLEACHING FACTORY - 2004 (170) E.L.T. 491 (Tri. - Mumbai) Issues Involved:
1. Condonation of delay in filing appeals.
2. Treatment of multiple textile processing units as single manufacturing units.
3. Applicability of exemption under specific Central Excise notifications.
4. Determination of whether the demand for duty is time-barred.
5. Definition and scope of "manufacture" under the Central Excise Act.
6. Interpretation of the bar under the proviso to Notification No. 253/82-C.E.

Detailed Analysis:

I. Condonation of Delay in Filing Appeals:
The Tribunal allowed the miscellaneous applications filed by the Revenue, condoning the delay in filing the appeals. The delay was due to the initial filing of consolidated appeals against different groups of textile processing units, which were later bifurcated into independent appeals as per the Tribunal's procedure.

II. Treatment of Multiple Textile Processing Units as Single Manufacturing Units:
The appeals arose from a common order by the Collector of Central Excise, Pune, which treated several groups of textile processing units as single manufacturing units. This treatment was for the purpose of denying the benefit of exemption under certain Central Excise notifications. The Tribunal examined the facts of Group No. IX as illustrative of all groups.

III. Applicability of Exemption under Specific Central Excise Notifications:
The Tribunal discussed the activities of M/s. Swastik Dyeing & Bleaching Factory (SDBF), M/s. Shri Datta Calendering (SDC), and M/s. Shree Ram Processors (SRP). It was noted that these units were availing exemptions under Notification No. 253/82-C.E. and Notification No. 130/82-C.E. for processes carried out without the aid of power. The Tribunal found that the units were independent entities and not a single manufacturing unit, thus eligible for the exemptions.

IV. Determination of Whether the Demand for Duty is Time-Barred:
The Tribunal upheld the finding that the entire demand was time-barred and the proviso to Section 11A(1) was inapplicable. The units existed prior to the amendment of Notification No. 80/76-C.E. on 24-11-1979, and there was no wilful suppression or deliberate fragmentation of units to evade duty. The legislative history and amendments indicated that the creation of independent units was not intended to evade duty but to comply with the legislative changes.

V. Definition and Scope of "Manufacture" under the Central Excise Act:
The Tribunal noted that processes like bleaching and mercerising done without the aid of power were exempt under Notification No. 137/77-C.E. and Notification No. 130/82-C.E. The processes of calendering and stentering were held not to amount to "manufacture" as per the Supreme Court's judgments in cases like Siddeshwari Cotton Mills and Mafatlal Spinning & Manufacturing Co. Ltd. Therefore, even if the units were treated as a single factory, the processes undertaken did not constitute "manufacture" and were exempt from duty.

VI. Interpretation of the Bar under the Proviso to Notification No. 253/82-C.E.:
The Tribunal held that the bar under the proviso to Notification No. 253/82-C.E. applied 'qua factory' and not 'qua manufacturer'. The units were recognized as separate factories by the department, and the processes were carried out in different premises. The factors such as common management and shared resources were irrelevant for determining whether the units constituted a single factory. The benefit of the exemption under Notification No. 253/82-C.E. was extended to the assessees.

Conclusion:
The Tribunal dismissed the appeals of the Revenue and allowed the appeals of the assessees. The cross-objections were disposed of in light of the above findings. The decision emphasized the independence of the units and their eligibility for exemptions under the relevant Central Excise notifications.