TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 320
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.... It is the case of the appellant that on the basis of information received by its intelligence agency, Bhagyalaxmi Processor Industry (hereinafter, Unit No. 1) and Famous Textile Packers (hereinafter, Unit No. 2) were processing cotton fabrics with the aid of power but without following any of the procedures laid down under the Act of 1944 as well as the Rules framed thereunder. The preventive staff carried out a search of both the Units on 21.01.2003 and executed a panchnama. It was noted that the factory premises of both the Units were situated in a common premises within the same compound. Both the Units were having industrial electricity connection as well domestic lighting connection. In Unit No. 1, a bail packing machine with an electric motor, a mercerizing machine as well as bleaching machinery were found installed. In the premises of Unit No. 2, a squeezing machine with electric motor as well as a stentering machine fitted with oil engine and driers operated with the aid of electric power were found. In the electric room, there were five electric meters of which two electric meters were for industrial connection, two other meters were for domestic lighting purposes while o....
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....ezed for removing extra water and thereafter were processed for stentering. Thereafter, the fabrics were again brought back to the premises of Unit No. 1 for bailing/folding on the machines installed at Unit No. 1 that was operated with the aid of electric motor. On the completion of this process, the fabrics were packed and returned to the customers. Since the entire process from receiving the fabrics till their bailing/folding was a continuous process, the same was completed with the aid of electricity. Hence, the Units were not entitled to claim any exemption under the said Notification. The liability to pay duty on the finished fabrics while removing the same after the process of bailing and folding was of Unit No. 1. The show cause notice was accordingly adjudicated against Unit No. 1 and the demand as made therein was confirmed against Unit No. 1. The Commissioner also imposed penalty on it under Section 11 AC of the Act of 1944. 5. Both the Units being aggrieved by the said adjudication again approached the CESTAT by filing two appeals. Both the appeals were heard together and the CESTAT by its judgment dated 28.09.2011 proceeded to hold that when the wet fabrics were cle....
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....The CESTAT had failed to be taken into consideration the various processes undertaken on the initial grey fabrics till the time of the final product was prepared. Referring to the Panchnama that was prepared by the Inspection team, it was submitted that the use of power during the course of stentering was clearly admitted. Even the CESTAT did not disturb the said finding. However, by wrongfully holding that the process undertaken at Unit No. 2 was not connected to the process undertaken at Unit No. 1, it proceeded to arrive at a wrong conclusion. It was thus clear that the benefit of exemption was not available specially when the process of stentering was integrally connected with the manufacture of cotton fabrics from grey fabrics. As the conclusion drawn by the CESTAT was contrary to the legal position settled by this Court, it could not be said that it had taken a possible view of the matter. A case was therefore made out to interfere with the findings recorded by the CESTAT. Reliance was also placed on the decision in Standard Fireworks Industries, Sivakasi and another Vs. Collector of Central Excise (1987) 1 SCC 600. It was thus urged that the order passed by the CESTAT be ....
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....s amendment by Act 18 of 2017. The same reads as under:- "2(f) 'Manufacture' includes any process:- (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture; or (iii) which in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer; and the word "manufacture" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account." Since, Unit No. 1 seeks the benefit of Notification No.5/1998-CE and especially Entry No. 106 therein, the same is reproduced hereunder:- S.No. Chapter or heading no. or sub heading no. Descript....
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....he various processes to which the raw material is subjected to (sic that the) manufactured product emerges. Therefore, each step towards such production would be a process in relation to the manufacture. Where any particular process is so integrally connected with the ultimate production of goods that but for that process manufacture or processing of goods would be impossible or commercially inexpedient, that process is one in relation to the manufacture. 14. The natural meaning of the word 'process' is a mode of treatment of certain materials in order to produce a good result, a species of activity performed on the subject matter in order to transform or reduce it to a certain stage. According to Oxford Dictionary one of the meanings of the word 'process' is "a continuous and regular action or succession of actions taking place or carried on in a definite manner and leading to the accomplishment of some result". The activity contemplated by the definition is perfectly general requiring only the continuous or quick succession. It is not one of the requisites that the activity should involve some operation on some material in order to (sic effect) its conver....
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.... the said Unit. The fabric in wet condition was then shifted to Unit No. 2 and subjected to squeezing and stentering. The dry fabrics were thereafter returned to Unit No. 1 where they were bailed and packed. It was thereafter that the cotton fabrics were finally cleared. The CESTAT while allowing the appeals preferred by both the Units came to the conclusion that the distinct processes carried out at Unit Nos.1 and 2 could not have been clubbed together. It held that both the Units were independently working on their own account and thus their activities were not liable to be clubbed together. For reaching that conclusion, the CESTAT was impressed by the fact that there was no commonality between the partners of both the Units, the machinery employed in both the Units were different, the job work bills were separately raised by both the Units and that the payments were separately made by them. 12. In our view, the CESTAT misdirected itself while emphasizing upon the distinct identities of the two Units and in the process ignoring the fact that both the Units were together involved in the process of manufacture of cotton fabrics from grey fabrics. It has come on record that after....