Supreme Court- Mathania Fabrics v. Commissioner of Central Excise, Jaipur

The appellants were engaged in the processing of cotton fabrics falling under Chapter 52. They claimed to be undertaking the processes of bleaching, mercerising, dyeing, printing, washing, drying and finishing before the fabrics were packed and cleared. Held, in any event it was submitted that when the position in law was not clear and the authorities had to issue clarification, Section 11A of Act cannot be invoked. Tribunal after referring to the definition of manufacture under Section 2(f) of the Act held, that the use of power in the operation of stirrer and electric motor for lifting water and caustic soda would amount to manufacture with the aid of power. Therefore, factually the stand that there was no use of power is unsustainable. Coming to the period of limitation the five years period has to be reckoned backward from 8th February 1989 when the show cause notice was issued. The Commissioner shall work out the liability and the penalty amount has to be equivalent to the amount of tax demand.

Manupatra Legal Database
Manupatra Round up