TaxTMI 
TaxTMI 
2013 (9) TMI 583
X X X X Extracts X X X X
X X X X Extracts X X X X
....Excise Rules, 1944 (Rules) and appellants had installed two Open Air Stenters out of which one had not been declared and further the Independent Processor who carried out heat setting and drying with the help of open air stenter is not eligible for benefit of the Rule applicable to Independent Textile Processor. 2. Appellants approached the Hon'ble High Court of Gujarat who took the view that the investment on plant and machinery installed by the appellant was less than Rs. 3 crores and they are eligible for the benefit of payment of duty on the basis of production capacity prescribed under the Rules [2004 (171) E.L.T. 160 (Guj.)]. The Revenue filed an appeal against this decision before Hon'ble Supreme Court and the Hon'ble Supreme Court set aside the order of the Hon'ble High Court of Gujarat and the appellants were directed to appeal before the Tribunal against the impugned order passed by the Commissioner and accordingly the appeal filed by the appellants is being considered [2011 (269) E.L.T. 3 (S.C.)]. The learned Advocate on behalf of the appellants made following submissions : 2.1 The appellant submits that the Commissioner did not consider the vital fact that they ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts which are to be arrived at on the basis of AS-10 (accounting standards-10) of ICAI. He submits that the Deputy Commissioner had made the mistake of taking the value including taxes and duty in the invoices whereas the same should be deducted as per ICAI standard. Further he also submits that if the value of consumables which is to be excluded from the value of plant and machinery and value is worked out as per invoices, the value of plant and machinery would work out to lower than Rs. 3 crores. 2.7 He also submitted that as regards open air stenter, the benefit cannot be denied on the ground that appellant has an open air stenter. What is required according to the Notification is that heat setting or drying are to be done exclusively by hot-air stenter. The fact that they have an open air stenter does not deprive them of the benefit of calculating the duty on the basis of Annual production capacity instead of payment of duty on actual manufactured quantity on ad valorem basis. 2.8 The ld. Advocate also filed written submissions and in the written submissions, he submitted that having an open air stenter does not result in denial of the benefit and for this purpose he reli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s' original investment in plant and machinery as on 1-5-2001 exceeded the limit of Rs. 3 Crores prescribed in the rule for availing the benefit of payment of duty on the basis of annual production capacity. There is no dispute that this is a condition which is required to be fulfilled. There is no dispute on the fact that value of plant and machinery has to be calculated on the basis of original invoice value and not depreciated value. Appellants are disputing the report of the Deputy Commissioner mainly on two grounds. The first ground is that while taking the invoice value the Deputy Commissioner made mistakes. For this purpose, the learned Advocate drew our attention to the Annexure-B prepared by them where the discrepancies have been explained. During the hearing itself, we found that in respect of some invoices amount actually paid was less than the invoice value. Such cases are tabulated below : Excise duty is taken as credit hence excluded in the last column. Name of supplier Particulars Invoice Value Amount paid Excise duty Value taken by Dy. Commr. Diff. between 1. Pankaj Machinery Flat Bed Screen Printer 620554 612154 28....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsp; ------------------ 3,09,18,669 Consumable (printing screens) .. 9,20,000 &n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pplication being granted by the Commissioner, apply to such independent textile processor in respect of the said goods in substitution of the provisions contained elsewhere than in this section, subject to such conditions and limitations as hereinafter laid down. (2) The independent textile processor, who wants to avail the special provisions contained in this section for the period from 1st May, 2001 to 31st March, 2002, in respect of his processing factory existing as on the 1st May, 2001, shall make the application to the Commissioner of Central Excise in the prescribed format, by the 20th May, 2001. If such application made by the 20th May 2001 is granted by the Commissioner of Central Excise, the facility to avail the provisions under this section shall be deemed to be available from 1st May, 2001. Pending grant of such application by the Commissioner of Central Excise, the independent textile processor may avail the provisions of this section on a provisional basis. However, if the application is rejected by the Commissioner of Central Excise, then he shall not be eligible to avail the provisions of this section from the 1st May, 2001 and he shall discharge the duty liabil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e used for heat setting or drying but may be used for other process. We cannot read the explanations to the rules and the notifications in isolation of its purpose as otherwise the words in explanation II would have been "no open air stenters should be installed in the factory of the applicant" instead of (as used) "no heat setting or drying is to be done on the open air stenters installed in the factory of the applicant" IT ADMITTEDLY DOES NOT MEAN ONE CANNOT HAVE OPEN AIR STENTER IN THE FACTORY Hence the purpose of the rules which prevail as legislated and printed in the books state that only processing of such specified fabrics will be done with the aid of a hot-air stenter but does not mean no other machines to be used or open stenter but state that one should not do heat setting or drying in the open air stenter in the factory and so should do the same exclusively on hot-air stenter only which we any way do in the case. A independent process house needs to have several ancillary machines besides hot-air stenter to process such fabrics of the given chapters and such meaning may not be that the entire processing should all be done only with hot-air stenter which i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ely with the aid of a hot-air stenter (hereinafter referred to as "independent textile processor"), and notifies the rate of excise duty as - (a) in the case of a processing factory whose average value of processed fabric is up to and including Rs. 30 per sq. mtr., Rs. 2.5 lakhs per chamber per stenter per month; and (b) in the case of a processing factory whose average value of processed fabric exceeds Rs. 30 per sq. mtr. Rs. 3 lakhs per chamber per stenter per month, installed in the processing factory, irrespective of whether such stenter or chamber is in use or not, or is in working condition or not. 2. For the purpose of payment of duty of excise, (i) In the case of a processing factory, existing as on 1st May, 2001, of an independent textile processor, the number of chambers of the hot-air stenter installed in such processing factory as on 1st March, 2001 or 1st May, 2001, whichever is higher, shall be taken into account; (ii) In the case of new processing factory coming into existence after 1st May, 2001, the number of chambers of the hot-air stenter installed in such ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ery or any part thereof during a financial year results in the reduction in the number of chambers in a hot-air stenter or in the number of hot-air stenters, installed in the processing factory, no account of such reduction shall be taken into account for computing the duty payable under this notification during that financial year and the duty of excise shall be payable during that financial year as if no such reduction in the number of chambers or hot-air stenters had taken place. 6. For the purposes of this notification, (a) a chamber (of a hot-air stenter), having a rail length of up (a) to 3.05 meter on each side, installed in the factory of the independent textile processor shall be construed as one chamber and any fraction exceeding such rail length of any such chamber shall be computed on a pro rata basis; (b) a float drying machine or any other equipment, except the (b) galleries, of a length 3.05 meters installed in or attached to a stenter for aiding the process of heat-setting or drying of the fabrics shall be deemed to be one chamber of a stenter and any fraction of such length shall be computed on a pro rata bas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the manufacture or production of the said goods." The words "the said goods" mean the goods which are produced by an independent textile processor with the aid of hot-air stenter. Thus, para-7 of the Notification makes it clear that exemption is available for an independent textile processor who according to Notification is the one who is engaged exclusively in manufacture or production of goods with the help of hot-air stenter. He submits that in view of the above, whether open air stenter is not put to use for heat setting and drying by the appellants is not relevant. It is not the case of the appellants that an open air stenter has not been used by them. It is their contention that it is not used for heat-setting or drying which is not supported by the Notification and hence they are eligible. 6.6 Further he also submits that the rates of duties given in the introductory paragraph (a) & (b) would also show that while prescribing the rate of duty, the Government have estimated the possible production per chamber in hot-air stenter. If the manufacturer can produce additional quantity by using an open air stenter, by extending the benefit of Notification in spite of an open ai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... possession of open air stenter. He also submits that an independent processor uses several ancillary machines besides the hot-air stenters and it cannot be held that the entire processing should also be done only by hot-air stenter which is not the purpose and cannot be. 7.2 We have considered his submissions. It is not the case of the appellants that a hot-air stenter is incapable of performing the function of heat setting and drying. When hot-air stenter can perform heat setting and drying besides stentering, the question arises why a manufacturer would do it in an open air stenter in addition. The answer to this is found in the decision of the Tribunal cited by the Learned Advocate and attached to the written submission. The decision was rendered in the case of Standard Niwar Mills v. CCE, Kanpur - 2001 (132) E.L.T. 150 (Tri.-Del). In this case the Tribunal was considering the predecessor notification which had provided the benefit of payment of duty on the basis of annual production capacity and the dispute was whether an assessee who had installed a hot-air stenter without the chamber was eligible or not. It was held that the appellants did not have the heat setting and dr....