2016 (3) TMI 301

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....pellants belief that it did not amount to manufacture is "bonafide belief". 2. The facts of the case, in brief, are that:- 2.1 The Appellant firm, at relevant time, was engaged in processing of fabrics using a novel process called Dew Drop Process. The process was carried out by the Appellant firm on job charges basis on dyed fabrics received from the merchants. 2.2 Drew Drop Process is a special printing process where the fabric is passed through engraved rollers where special adhesive is applied on the dyed fabrics. The fabric is passed through dryer to fix the paste. The fabric is then passed through a machine where metal foil gets stamped on the adhesive already applied. The resultant fabric emerge as fancy printed fabrics with desi....

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....posed on the partner and also 18 merchants who obtained the dew drop fabrics. 2.6 The notice has been confirmed by the original authority on findings that dew drop process amounts to manufacture liable to duty @ 16% under CETH 5406.29. Enlarged limitation is applied for reasons that dutiable goods were cleared without registration, without maintenance of records and cleared without payment of duty with intent to evade. Mandatory penalty is imposed for the same reason. Personal penalty of Rs. 1,00,000/- is imposed on the partner. Personal penalty of Rs. 5000/- is imposed on each of the 18 merchants. 3. On appeal filed by the Appellants, the Commissioner (Appeals), vide impugned Order-in-Appeal, upheld the Order-in-Original except for dropp....

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.... contested the action taken by preventive parties on the ground that the process of Dew Drops does not amount to manufacture within the definition of Section 2(f) of Central Excise Act, 1944. The learned Counsel also relied upon the decision of Hon'ble Supreme Court in the case of Padmini Products Vs CCE  1989 (43) ELT 195 (SC), wherein the Hon'ble Apex Court has held that the extended period of limitation under Section 11A cannot be invoked when the Appellants have a bonafide belief that they are not liable to Central Excise duty. He also drew the attention of the Bench to the decision of the Tribunal in the case of Siddeshwari Cotton Mills Ltd & Another Vs CCE Calcutta  1984 (18) ELT 297 (Tri-Kol), wherein the Tribuna....

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.... for the Revenue relied upon the following decisions:- i) Pasupati Spinning & Weaving Mills Ltd Vs CCE Chandigarh-2015 (318) ELT 623 (SC) ii) V.N.K. Menon & Co. Vs CESTAT Chennai-2015 (323) ELT 524 (Mad.) iii) Salasar Dyeing & Printing Mills (P) Ltd Vs CCE Surat-I-2013 (290) ELT 322 (Guj.) iv) CCE Surat-I Vs Neminath Fabrics Pvt. Ltd. 2010 (256) ELT 369 (Guj.) 7. On careful consideration of the arguments of both the sides and on perusal of the records, we find that the Dew Drop Process was brought into the country in August 2000 from Korea. We have gone through the write-up on the process of Dew Drop as well as the Certificate submitted by the Appellant in Appeal Memorandum which is from Dr.R.S. Gandhi, Textile Technologist and ex-....