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CX - Processed Textile Fabrics - although HASITPACD Rules, 1998 have been held to be ultra vires of Sec 3A of Act, yet manufacturer is liable to pay duty u/s 3 of CEA, 1944 in respect of dutiable goods cleared without payment of duty - pre-deposit ordered: CESTAT

By TIOL News Service

MUMBAI, JAN 30, 2013: THE applicants are engaged in the manufacture of processed textile fabrics falling under Chapters 54 & 55 of the CETA, 1985. The annual capacity of the stenters of the applicant under the provisions of the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 was determined by the Commissioner of Central Excise vide order dated 29.6.1999. As per the determination, the applicant was required to deposit the duty as determined, at the end of each month. However, the applicant failed to do so, therefore periodical show cause notices were issued and the adjudicating authority confirmed the demand of Rs. 11,86,006/-, interest and penalty.

So, the applicant is before the CESTAT with an application for stay and submits that with the omission of section and rules under which the duty is demanded without the saving clause, the present proceedings are not sustainable. The applicant relied upon the decisions in Beauty Dyers vs. UOI - (2004-TIOL-17-HC-MAD-CX) and Krishna Processors vs. UOI- 2013-TIOL-72-HC-AHM-CX.

The Revenue representative submitted that although the Madras High Court in the case of Beauty Dyers (supra) had held as above but had also held that the manufacturers are liable to pay duty of excise under Section 3 of the Central Excise Act.

The Bench agreed to the submission of the Revenue and observed -

"5. We find that the applicants are engaged in the manufacture of processed textile fabric. During the period in dispute, the applicants cleared the processed fabric and have not paid duty as determined under the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules by the Commissioner of Central Excise. The present proceedings are in consequence to the order fixing the annual capacity of the stenters. Even the Hon'ble Madras High Court in the case of Beauty Dyers (supra) held that the rules are ultra vires, however, the manufacturer is liable to pay duty under Section 3 of the Central Excise Act. As the applicant cleared dutiable goods during the period in dispute and has not paid duty, therefore it is not a case for total waiver of duty…."

Holding so, the CESTAT directed the applicant to make a pre-deposit of Rs.3 lakhs and report compliance for obtaining stay.

In passing: The right hand gives. The left hand takes away!

(See 2013-TIOL-181-CESTAT-MUM)


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