Semi Finished fabric mentioned in Register would not be considered as Finished Product: Bombay HC quashes order of CESTAT [Read Order]

In a recent decision, the Bombay High Court declared that the semi-finished fabric encompassed in the RG-1 register would not be regarded as a finished product and nullified the Customs, Excise and Service Tax Appellate Tribunals (CESTAT) finding.  Also, the bench restored the file back for readjudication.

The Appellants Dhanesh Textiles Industries Pvt. Ltd. is engaged in processing fabrics on a job work basis. Till 16 December 1998, the said processed fabrics were chargeable to duty at ad valorem rates of 12% Basic Excise Duty.

The Appellants’ stock of manufactured fabrics and semi-finished fabrics was ascertained by the Central Excise officers and got them recorded in the RG-1 register and the same was certified under the signature of the Central Excise officer.

According to the Appellants, the Appellants had given break of the same as finished goods and balance was quantified as semi finished goods in the RG-1 Register.

In an appeal filed before Appellate Tribunal by the petitioner, the tribunal proceeded to observe that the Respondent had failed to produce any evidence to show that the loose quantity reflected in the RG-1 Register consisted of grey fabrics which was yet to undergo several processes.

Also took the view that in the case of textile process undertaken amounts to manufacture, no fabric can be considered as a semi-finished fabric and also once it is mentioned in the RG-1 Register, it will have to be considered as finished product. Thus held in favour of the department.

The bench observed that though there is an assessment of facts by both the Commissioner (Appeals) and the Appellate Tribunal, it is quite clear that the basic position of law has revolved around the decision in the case of M/s. Vishnu Dyeing and Printing Works.

Further noted that the Appellate Tribunal relied on its own decision i.e., M/s. Vishnu Dyeing and Printing Works in the same case to hold it otherwise.

A Division Bench of  Justice Abhay Ahuja and Justice Nitin Jamdar decided that the “manner in which one of the main findings sought to be scrutinized is reversed, we have to accept the submission of the learned counsel for the Appellants that the matter needs reconsideration by the Appellate Tribunal.”

To Read the full text of the Order CLICK HERE

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