Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Bharat Shoe-Lace Works on 30 October, 1986
Equivalent citations: 1987(11)ECC81, 1987(10)ECR516(TRI.-DELHI), 1987(27)ELT545(TRI-DEL)
ORDER G. Sankaran, Vice-President (T) 1. The present proceedings arise out of Order-in-Appeal No. 1043/80 dated 19.7.1980 passed by the Appellate Collector of Central Excise in favour of M/s. Bharat Shoe Lace Works, Bombay (the respondent before us). On examination of the records of the case, the Central Government came to the tentative view that the said order was not legal, proper and correct. Therefore, it issued a notice dated 30.6.1981 to the respondent under Section 36(2) of the Central Excises and Salt Act, 1944, calling upon it to show cause why the Appellate Collector's order should not be set aside or such order as considered fit should not be passed. In due course, these proceedings have come to this Tribunal in terms of Section 35P of the Central Excises and Salt Act, for disposal as if it were an appeal filed before the Tribunal by the Revenue. 2. The facts of the case, briefly stated, are that the respondent, at the material time, was engaged in the manufacture of Braided Fibre Glass Sleevings falling under item No. '22 F of the Central Excise Tariff Schedule (C.E.T.). It was alleged by the department that they had manufactured and cleared a quantity of the goods without taking a central excise licence and without observing the prescribed procedure for clearance of goods. Adjudication proceedings were initiated culminating in the Assistant Collector's Order dated 15.11.79 by which he rejected the respondent's claim that the goods were exempted from payment of duty by Central Excise Notification No. 87/76 dated 16.3.76. The Assistant Collector confirmed the demand for duty for Rs. 60,260.31 and imposed a penalty of Rs. 2,000/- on the respondent. In appeal, the respondent's contention was accepted by the Appellate Collector of Central Excise, Bombay. The Appellate Collector held that the goods were eligible for the exemption claimed and set aside the Assistant Collector's order. It is this order which was proposed to be, set aside by the Central Government by the notice dated 30.6.1981. 3. The basis of the above show cause notice was that the goods in question did not appear, to be classifiable as glass fabrics since they were not woven goods. Only woven material could be considered as fabrics as held by the Supreme Court in M/s. Gujarat Woollen Felt Mills v. U.O.I. (AIR-1977 SC-1548) 1977 E.L.T. (J 24). If was further alleged that the goods were not known in commercial parlance as fabrics. The respondent's Advocate Shri S.J. Bhambhlani filed a reply dated 25.7.81 denying the allegations in the notice. 4. We have heard Shri K.C. Sachar, D.R. for the Revenue and Shri S.J. Bhambhlani, Counsel for the respondent. 5. There is no dispute before us about the position that the subject goods fall for classification under item No. 22 F of the CET. Both sides are agreed on this. While Revenue contends that braided fibre glass sleevings, not being woven fabrics, are not eligible for duty exemption admissible to glass fabrics in terms of notification No. 87/76, the respondent contends to the contrary. 6. In Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan & Ors-1980-E.L.T.-383 (S.C.), the goods were no doubt, as pointed out by the learned D.R., tyre cord fabric, a woven fabric in which the warp consisted of rayon spun yarn twisted into cords (packed 25 to the inch) and the weft consisted of cotton thread, (2 to 5 per inch), the cord content forming the major component. But, it has to be noted that the Court took note of several authorities defining fabrics as consisting of bonded, felted, knitted, braided, and not merely of woven, material. 7. In Porritts & Spencer (Asia) Ltd. v. State of Haryana 1983 E.L.T.-1607 (SO. the goods involved were dryer felts (material woven on the warp and woof pattern) used in paper making. But, the court noted in para 6 of the judgement :- "There is such phenomenal advance in science and technology, so wondrous is the variety of fabrics manufactured from materials hitherto unknown or unthought of and so many are the new techniques invented for making fabric out of yarn that it would be most unwise to confine the weaving process to the warp and woof pattern." Again in para 7:- "But, it -must, be remembered that the concept of textiles is not a static concept. It has, having regard to newly developing materials, methods, techniques and processes, continually expanding content and new kinds of fabric may be invented which may legitimately, without doing any violence to the language, be treated as 'textiles'." 8. A third decision of the Supreme Court cited before us is Filter Co. & Anr, v. Commissioner of Sales Tax, 'Madhya Pradesh & Anr. 1986 (24) ELT 180 (SC). The goods involved were compressed woollen felts. The process of manufacture, as described in the judgment, is as follows :- "The raw material consisting of woollen fibres is first mixed thoroughly and thereafter carded on a carding machine, which process results in the laying of the fibres in a combed condition in a uniform direction. The combed fibres in the shape of a web layer are then subjected to the process of hardening in a machine having an eccentric motion; the carded webs are put through two layers of cloth and passed through a steam chest. This results in the web/wool layer being converted in the form of a sheet, which is then subjected to the process of milling to impart to it necessary tensile strength and shrinkage. For this purpose, the sheet is put in a machine, which has two rows of contra-rotating rollers to provide the necessary felting action to the sheet. The sheets run in the machine till the desired shrinkage and density are achieved. After this, the sheet is dried and trimmed at the ends and thereafter subjected to the process of calendering and for this purpose it is passed through steam heated contra-rotating rollers. The resultant product is 'felt'." Thus, it may be seen that the product is a non-woven material obtained by compressing woollen fibres and subjecting the same to heat and moisture. The question was whether such felt was "woollen fabric" within the meaning of "cloth" so as to fall within the scope of entry 6 of Schedule I of the M.P. General Sales Tax Act 1958 ("all varieties of cloth manufactured in mills or on power looms or handlooms including processed cloth but excluding hessian cloth"). In para 14 of "the judgment at page 185 of the report, the court took note of the meaning of the word "cloth" in Webster's New International Dictionary and observed that "cloth" is woven, knitted or felted material which is pliable and which is capable of being wrapped, folded or wound around. The court upheld the order of the Commissioner of Sales Tax who inter alia had expressed 'the view that though the expression "cloth" would take in non-woven material inclusive of felt, pliability was as essential attribute of cloth. 9. The above judgment is the latest in the series of decisions of the Supreme Court in the field. It had also taken note of the earlier judgment in the Gujarat Union Woollen Felt Mills and Porrits and Spencers case. The latest decision approves the prosposition that "cloth" need not necessarily be woven material. 10. There is an authority which, in our opinion, is very apposite to the dispute before us, though the goods involved there were cotton braided cord. The Madras High Court in the Govt. of Madras v. Madurai Braided Cord and Tape Producers Cooperative Industrial Society (1968-Vol.22 STC 470) case, was concerned with cotton braided cord. Item 19 of the CET came in for consideration in the context of the Sales Tax legislation. The Court expressed the view that braided cord may well be described as cotton fabric within the meaning of Section 14 of the Central Sales Tax Act, 1956 defining goods of special importance in inter-state trade or commerce shall cover inter alia (Cotton fabrics as defined in item No. 19 of the CET). The cotton braided cord in that case was to be made into shoe laces after being cut into small pieces. 11. The goods in the present dispute are braided fibre glass sleevings. From the sample produced by the respondent for our perusal during the hearing, it is seen that they are used for manufacture into shoe laces. The question is whether the goods would fall within the description glass fabrics in notification No. 87/76 dated 16.3.76. Applying the ratio of the Madras High court judgment referred to in the preceding paragraph, we are of the opinion that the subject goods do fall within the description "glass fabrics". In this view of the matter, the basis of the show cause notice fails. The notice is discharged and the appeal is dismissed. V.T. Raghavachari, Member (J)
12. I have, with care, perused the order prepared by the Vice President. This was specially necessary in view of the fact that the order proposed runs counter to an earlier order of this Tribunal in the case of Collector of Central Excise, Bombay v. Industrial Marketing Corporation, Bombay 1985(Vol. 22)ELT 950. No reference was made to this decision during the course of the hearing before us. In that decision it had been observed, with reference to varnished Sleevings, that they would certainly fall outside Item 22 B since sleevings are tubular in shape and would not therefore, be fabrics, which would be pieces of woven cloth of any length or width. The decisions cited before us in the present hearing had not been cited in the hearing in the case mentioned supra and therefore had not been considered in that decision. In view of the decisions cited before us in this hearing, which have been fully discussed in the order prepared by the Vice President, I concur with his view that the braided fibre glass sleevings fall within the description "glass fabrics" and therefore the order of the Appellate Collector has to be upheld. I, therefore, agree that the appeal is to be dismissed and the review notice discharged.