TaxTMI 
TaxTMI 
2000 (11) TMI 200
X X X X Extracts X X X X
X X X X Extracts X X X X
....rics and cotton knitted fabrics. Levy on processed textile fabrics on the basis of capacity of production under Section 3A on specified processed textile fabrics as against ad valorem base levy was introduced under Notification Nos. 41/98-C.E. (N.T.), 36/98-C.E. all dated 10-12-1998. The new scheme of levy applied only to the Independent Processors of specified textile fabrics. For this purpose, an independent processor has been defined as a manufacturer who is engaged exclusively in the processing of textile fabrics with the aid of power and who also have the facility in his factory including plant and equipment for the heat setting of fabrics with the aid of power or steam in a hot air stenter and who has no proprietary interest in any fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he factory was sent to the department; that for the purpose of processing the fabrics they have installed one stenter of four Chambers, printing tables, two dying winches and one hydroextraction machine; that they were having another units in the name and style of M/s. Vani Spinners (P) Ltd.; that there were three knitting machines for knitting purposes; that in the knitting units, the appellant was buying cotton as well as man-made yarn for knitting; that out of the knitted fabrics some quantity was sold in the market and some quantity was transferred to the processing unit for processing on hot air stenter and thereafter it was sold in the market and some quantity was transferred to the processing unit for processing on hot air stenter an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h the aid of power and who also has the facility in his factory (including plant and equipment) for carrying out heat setting with the aid of power or steam in a hot air stenter, and who has no proprietary interest in any factory engaged in the spinning of yarn or weaving of fabrics." It was argued that the Explanation II as amended by Notification No. 2/99, dated 13-1-1999 reads as "For the purposes of this notification, an independent processor means a manufacturer who is engaged exclusively in the processing of fabrics with the aid of power and who also has the facility in his factory (including plant and equipment) for carrying out heat setting with the aid of power of steam in a hot air stenter, and who has no proprietary interest in a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cate submits that the period in the instant case 13-1-1999 to 9-6-1999 and, therefore, the relevant Explanation applicable to their case was the Explanation under Notification No. 2/99, dated 13-1-1999. He submits that this Explanation was amended by Notification No. 16/99, dated 28-2-1999. He, therefore submits that these two notifications are important for the purpose of determining whether the appellants were required to file a declaration under Rule 3 or not. He submits that the appellants were not only the independent processors but were also having proprietary interest in unit No. 1 and, therefore they were not covered by the Explanation of Notification No. 2/99, dated 13-1-1999. He submits that up to 27-2-1999, they were not at all r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... only a small part was sent to the processing unit. He, therefore, submits that the term 'exclusively' used in the processing of fabrics assumed importance. In the instant case, the appellant was processing 98% of fabrics manufactured by others and only 2% of fabrics manufactured in his second unit and thus he could be termed as an independent processor. He submits that the appellant was an independent processor insofar as the Explanation under Notification No. 16/99 is concerned. He submits that the position becomes very clear inasmuch as the spinning, weaving and knitting was only a small unit and was not contributing substantially to the work of processing unit. He, therefore submits that since the spinning, weaving and knitting unit was....