2008 (1) TMI 398

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....o benefit of concerned notifications. In case of appellant M/s. Vimal Textile Mills, the concerned Notifications were Notification No. 28/94-C.E., dated 1-3-1994 the Notification No. 8/96-C.E., dated 23-7-1996 and its successor Notifications. CESTAT denied the benefit relying on a Larger Bench's decision in the case of M/s. Mathania Fabrics v. Commissioner of Central Excise, Jaipur [2002 (142) E.L.T. 49 (Tri. - LB)]. Same is the subject matter of challenge in C.A. No. 5398 of 2002. 2. Background facts in a nutshell are as follows : Appellants are engaged in the processing of cotton fabrics falling under Chapter 52. They claimed to be undertaking the processes of bleaching, mercerising, dyeing, printing, washing, drying and finishing befor....

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....in short the 'Act') was not applicable. 5. Stand of the Revenue on the other hand was that the amendment to the Notification was not retrospective and in effect it substituted the explanation. Reference was also made to the Explanation by Notification No. 35/99-C.E., dated 4th August, 1999 which reads as follows : "Explanation. - For the purpose of this exemption, cotton fabrics subjected to any one or more of the following processes with the aid of power, shall be deemed to have been processed without the aid of power or steam namely: chemicals for lifting the water and for drying the fabrics does not amount to use of power in the processing of cotton fabrics." 6. CESTAT held that there was nothing in the Notification dated 4-8-99 to su....

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....ctric motor for lifting water and caustic soda would amount to manufacture with the aid of power. In view of the decision of this Court in Rajasthan State Chemicals Works case (supra) the stand about the applicability of Section 11A was held to be untenable. It held that the period involved was subsequent to the decision. Strong reliance is placed on a letter of Commissioner of Central Excise dated 10-1-1999, to contend that there was doubt about the nature of the process involved. Said letter is significant. In view of this Court's decision it is not known under what circumstances the letter was written. It is to be noted that the penalty amounts were equivalent to the extra demand raised but the Tribunal has reduced to it to Rs. 25,00,000....