2002 (4) TMI 102

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....equires reconsideration. 2. Challenge in this appeal is against the order passed by Commissioner of Central Excise dated 28-3-2001 confirming the demand of Central Excise duty to the extent of Rs. 71,09,050/-. A redemption fine of Rs. 1 lakh and a penalty of Rs. 3 lakhs were imposed under Rule 173Q of the Central Excise Rules, 1944. The matter came by way of remand before the Commissioner as per Order Nos. 8-10/2000-D, dated 15-11-99 for deciding the case afresh on merits as well as on the question of limitation by observing the principles of natural justice. It was alleged in the show cause notice issued to the assessee that they had been carrying on the process of bleaching of grey cotton fabrics with the aid of power as lifting water ....

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....hether the use of power by the appellant for lifting water and pouring it into the bleaching tanks and kiers would make the process of bleaching fabrics by the appellant with the aid of power. Secondly, whether the demand is time barred. The process of bleaching of fabrics is explained by the appellant as containing three stages (i) kiering process (ii) desizing process and (iii) bleaching process. In kiering process, water is poured in kier and cotton fabric is also put in kier manually and vessel is heated by firewood manually. After boiling of the fabric in the kier, fabrics are immersed in desizing tank through rollers worked manually or by bullocks run contraption and the sizing material is removed from the grey manually. After desizin....

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..... Therefore use of power in process incidental to or ancillary to the specified process, namely dyeing in the case concerned, will not make the assessee ineligible for the exemption. It was held that power had not been used in the process of dyeing although power has been used incidental or ancillary to dyeing, namely, mixing of dyes. If the dictum in he above decision is accepted there is no dispute that the appeal of the assessee is only to be allowed. But the learned Departmental Representative would contend that the above decision of this Tribunal is in direct conflict with the dictum laid down by the Supreme Court in CCE v. Rajasthan State Chemical Works. But according to the learned Counsel for the appellant, the above decision of the....

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....was carried on with the aid of power. Another respondent M/s. Sunderson (Minerals) Ltd. are manufacturer of lime from coke and lime stone. The raw materials are lifted to the platform at the head of the kiln by aid of power. At the kiln head the raw materials are mixed manually and fed into kiln. Since the power is used for lifting the raw material at the kiln head, they were denied the benefit of the notification. 6. After referring to Section 2(f) of the Central Excises & Salt Act, 1944, it is observed that Clause (f) gives an inclusive definition of the term 'manufacture'. It was then observed that 'manufacture' involves series of processes. A natural meaning of the word 'process' is a mode of treatment of certain materials in order t....

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....but it is a part of a continuous process but for which the manufacture would be impossible. The handling of the raw materials for the purpose of such transfer is then integrally connected with the process of manufactured. The handling for the purpose of transfer may be manual or mechanical but if power is used for such operation, it cannot be denied that an activity has been carried on with the aid of power in the manufacturing process." According to the Apex Court, it is not correct to say that the process of manufacture starts only when evaporation of the brine starts. The preliminary steps like pumping brine and filling the salt pans form integral part of the manufacturing process. Similarly, when coke and lime are taken to the platfo....

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....ion for the reason that it was rendered in connection with a notification where exemption is denied when power is used in a process in or in relation to the manufacture. No such distinction is seen made in the above decision, namely, a process in the manufacture and a process in relation to the manufacture. In the light of the above, we have to hold that the decision in Kanti Prasad Tibrewala has not been rendered in tune with the dictum laid down by the Supreme Court in Rajasthan State Chemical Works. 9. If pumping of brine into salt pans and lifting of coke and lime stone to the platform with the aid of power can be treated as part of the continuous process of manufacture, there is no reason to hold otherwise when power is used for lif....