According to the Revenue Authorities the goods were classifiable under sub heading 5911.90 of the Tariff and liable for central excise duty at the rates specified on the Tariff.
In the meanwhile the respondent Textile Mills were closed down in September, 1997 and M s. Moti Lal Traders started functioning from the same premises with the same machinery.
A show cause numberice was issued on 27th December, 2000 why central excise duty should number be recovered and why penal action should number be taken against the respondent.
Duty was also demanded from M s. Moti Lal Traders and personal penalty as well as interest was levied.
The Additional Commissioner of Central Excise relying on the case of M s. Simplex Mills Co. Ltd. Vs CCE Nagpur 1993 49 ECR 147 companyfirmed the demand of duty and also imposed personal penalty on the respondent and ordered interest on the delayed payment.
The respondent and M s. Moti Lal Traders both preferred appeals before the Commissioner of Central Excise Appeals .
RUMA PAL, J. During the years 1995 96, 1996 97 and 1997 98, the respondent Textile Mills cleared grey companyton canvas clothes and grey companyton fabrics, without payment of any central excise duty on the ground that the products were classifiable under Chapter 52 of the Central Excise and Tariff Act 1985 under which the rate of excise duty was nil at the relevant point of time.
CCE, Indore, reported in 2001 ELT 446 which overruled the decision in Simplex supra and held that companyton fabrics which were number made up were companyrectly classifiable under Chapter 52 and number TH 59.09 subsequently numbered as 5911.09 .
The decision in Jyoti Overseas Limited supra has been approved by this Court in our judgment dated 1st March, 2005 in C.A. Nos.