ORDER
V.K. Agrawal, Member (T)
1. This is an application, filed by M/s. Nath Soot Gola Factory for waiver of pre-deposit of Central Excise duty amounting to Rs. 11,65,974/- and penalty of Rs. 10 lakhs confirmed by the Commissioner (Appeals). Shri Vivek Kohli, learned Advocate, submitted that the applicants are engaged in the activity of rewinding polys-ter and cotton yarn from hanks and cones to tubes; that the Additional Commissioner, Central Excise under the Adjudication Order No. 12/99, dated 15-3-99 demanded the duty of Excise and imposed penalty on the ground that Yarn manufactured by them is Sewing Thread; the Commissioner (Appeals) also confirmed the Adjudication Order, that as per Note 3 to Section XI Sewing Thread means multiple (folded) or cabled yarn – (a) Put up on supports of a weight (including support) not exceeding 1000 gms., (b) Dressed for use as Sewing Thread, and (c) with Final Z twist. He, further, submitted that the Chemical Examiner in his report has only stated that the yarns were having Z twist and the weight did not exceed 1000 gms.; that the test report is silent about the yarn being dressed for use as Sewing Thread; that this treatment, according to Explanatory Note, is designed to facilitate the use of textile yarn as sewing thread, for example, by giving it anti-fraction property or thermal resistance preventing the formation/ of static electricity or improving its appearance. Such treatment involves the use of substances based on silicon, starch, wax, paraffin, etc.; that in the absence of any mention in the test report of the impugned yarn being dressed for use as sewing thread, it cannot be treated as Sewing Thread; that the Commissioner (Appeals) has also given his finding that the Chemical Examiner’s report is silent on this aspect; that however, he has rejected their plea by observing that the goods were cleared by them as sewing thread. The learned Advocate also contended that the demand is time barred as the officers visited their premises on 8-11-95 and first show cause notice was issued on 6-5-96 whereas the impugned show cause notice has been issued on 30-7-1998 demanding duty for the period from 19-4-95 to financial year 1995-96; that as the investigation was complete by the time the first show cause notice was issued there was no reason for the department to issue the present show cause notice on 30-7-98-He also mentioned that the applicants are eligible to the benefit of exemption under Notification No. 35/95-C.E., dated 16-3-95 as amended by Notification No. 84/95 dated 18-5-95.
2. Opposing the prayer, Shri Atul Dikshit, learned SDR, submitted that the applicants had neither filed any reply to the show cause notice nor they appeared for personal hearing fixed thrice in the month of February, 1999; that now they cannot claim that the product is not sewing thread; that in any case Shri Pran Nath Minocha, partner of the applicant firm, had stated in his statement dated 8-11-95. that they manufacture sewing thread with the help of drum binding machine and tube rewinding machine, that in view of this admission their product is nothing but sewing thread chargeable to Central Excise duty. He also relied upon the decision in the case of Shree Baidyn Nath Ayurved Bhawan Ltd. v. CCE, 1996 (83) E.L.T. 492 (S.C.) wherein it was held that resort should not be had to the scientific and technical meaning of the term and expressions used but to their popular meaning. In reply the learned Advocate relied upon the decision in the case of Bakelite Hylam Ltd. v. CCE, Hyderabad, 1998 (101) E.L.T. 561 (S.C).
3. We have considered the submissions of both the sides. In view of Note 3 to Section XI of the Central Excise Tariff, for the purpose of Heading Nos. 52.04, 54.01 and 55.08 for being treated as sewing thread one of the condition specified is that yarn should be dressed for use as sewing thread. The appellants have rightly submitted that the test report by the Chemical Examiner is silent on this aspect which has been admitted in the impugned order also. In view of this we are of the view that the applicants have made out a strong prima facie case in their favour. Accordingly, we set aside the recovery of entire amount of central excise duty and penalty during the pendency of the appeal. The matter will come up for final hearing on 30-1-2002.