Whether the polyester sewing thread manufactured by the appellant is excisable or not.

PJ/Case Law/2018-2019/3471

Case:PERFECT THREAD MILLS LTD.

Citation: 2015 (323) E.L.T. 407 (Tri. - Del.)

Issue:Whether the polyester sewing thread manufactured by the appellant is excisable or not.

Brief facts:In this case, the appellant are manufacturer of polyester thread made by twisting of duty paid yarn. The point of dispute is as to whether making thread amounts to manufacture and is chargeable to duty. This issue was decided against the appellant vide Order-in- Original No. 171/2003, dated 3-6-2003 of the Assistant Commissioner. This order of the Assistant Commissioner was upheld by the Commissioner (Appeals) vide Order-in-Appeal No. 117 (HKS)CE/JPR-II/2006, dated 3-2-2006 against which this appeal has been filed.

Appellant’s contention:The appellant pleaded that the appeal has been filed against the Commissioner (Appeals)’s order holding that making sewing thread by the appellant amounts to manufacture and would attract central excise duty, that this decision adversely affected the appellant, that in view of this decision of the Commissioner (Appeals), two show cause notices have been issued for demand of duty of Rs. 3,83,960/- and Rs. 9,765/- in respect of manufacture and clearance of polyester thread on the ground that the process of making polyester thread from duty paid yarn amounts to manufacture, that once the appeal has been filed against the order of the Commissioner (Appeals) or the Commissioner by which an assessee is aggrieved, that appeal has been validly filed under Section 35B and the same cannot be disposed of without going into the merits of the case, and that in view of this, the order of the Tribunal may be recalled and the appeal be restored for decision on merits. She also pleaded that the order also mentions that if the appellant is aggrieved in future, it is left to the appellant to come before the Tribunal for reddersal of the grievance, if so advised, and since on the basis of the Commissioner (Appeals)’s order, two show cause notices have already been issued, this appeal must be considered on merit.
Respondent’s Contention and Reasoning of Judgement:DR opposed the ROM application, pleading that the recall of the order dated 8-1-2014 by allowing the restoration application shall amount to review of the order by the Tribunal.
The dispute in this case is as to whether the polyester sewing thread manufactured by the appellant is excisable or not in this regard the point of dispute is whether the process of manufacture of polyester sewing thread amounts to manufacture. Initially, this issue was decided in the appellant’s favour by the Assistant Commissioner and on review appeal being filed by the department against the Assistant Commissioner’s order before the Commissioner (Appeals), the Commissioner (Appeals) vide his order dated 3-2-2006 reversed the Assistant Commissioner’s order holding that the process of making sewing thread would amount to manufacture. The appellant, being aggrieved with this order, which is against them, have filed this appeal before this Tribunal under Section 35B. In our view, once an appeal has been filed against the order of the Commissioner (Appeals) or the Commissioner with which the assessee is aggrieved, the appeal has to be decided on merit unless the provisions of Section 35F are applicable and the same have not been complied with. In this case, there is no demand of duty or imposition of penalty. Therefore, there is no question of pre-deposit of duty demand confirmed or penalty imposed for compliance of the provisions of Section 35F before the appeal may be heard. The point of dispute in this case is as to whether the process undertaken by the appellant for making polyester sewing thread amounts to manufacture and would attract central excise duty. This issue has been decided against the appellant by the Commissioner.
In the circumstances, in our view, this appeal should be decided on merit, and the Tribunal cannot dismiss the appeal without going into the merits of the case on the ground that the appellant has not explained as to whether the decision on the issue involved in this case has affected, the appellant and the Tribunal is not an Advance Rulings Authority. The question of application for advance ruling arises only when an eligible person wants the authority’s decision on some question relating to rate/levy of duty, valuation, etc., and the absence of assessment order against him, he cannot approach the Tribunal or any High Court. But when there is an adverse order of commissioner against an assessee, the only course left before him is to file an appeal before the Tribunal which the Tribunal is bound to decide on merits. Since the order impugned in this appeal clearly affects the appellant adversely, and the appellant has good and valid reason to be aggrieved with this order and under Section 35B any person aggrieved by an order passed by Commissioner as an adjudicating authority or the Commissioner (Appeals), can file appeal to Tribunal, the order dated 8-1-2014 dismissing the appeal on the ground that the impugned order does not adversely affect him, suffers from a mistake apparent from record. We, therefore, recall the Final Order No. 50128/2014, dated 8-1-2014 passed by this Tribunal and restore the appeal to its original number.

Decision: The appeal is decided in favour of the applicant.

Comment: The gist of the case is that, the making of thread does not amount to manufacture and thus it does not attract any duty.

Prepared by:Himanshu Bhimani

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