Customs, Excise and Gold Tribunal - Delhi
Morarjee Goculdas Spg. And Wvg. Co. Ltd. vs Collr. Of C. Ex. And Cus. on 8 May, 1992
Equivalent citations: 1992(62)ELT181(TRI-DEL)
ORDER P.K. Kapoor, Member (T)
1. This is an appeal against the order passed by the Collector of Central Excise (Appeals), Bombay. Briefly stated the facts of the case are that the appellants filed a classification list wherein they classified the product "Polyester Cotton Sari 67% + 33%, carborised" under Central Excise Tariff Item 22(1)(b). They claimed partial exemption of duty in terms of Notification No. 35/84-C.E., dated 1-3-1984 which prescribed a concessional rate of duty on fabrics falling under Tariff Item No. 22 and containing less than 70 per cent Polyester fibre. On test, the composition of the fabric was found to be 100% Polyester. Therefore, the Asstt. Collector issued a notice requiring the appellants to show cause why the claim for concessional duty under Notification No. 35/84-C.E., dated 1-3-1984 should not be denied. The appellants claimed that the fabric manufactured out of 67% Polyester Fibre and 33% cotton could not be treated as consisting of 100% Polyester fibre simply because the cotton content was not detectable on account of the special effect arising out of the carbonisation process. The Asstt. Collector rejected the appellants claim and on the grounds that the fabric in question consisted of 100% Polyester, he held that they were not eligible for concessional rate of duty under Notification No. 35/84-C.E., dated 1-3-1984. By the impugned order the appeal filed by the appellant against the order passed by the Asstt. Collector was rejected by the Collector (Appeals).
2. On behalf of the appellants the learned Consultant Shri P.A.V. Kudav appeared before us. He stated that the Grey Fabrics containing 67% Polyester Fibre and 33% cotton processing into Bleached, Dyed, Printed fabrics were assessable at the concessional rate of duty under Item 22(b) read with Notification No. 35/84-C.E., dated 1-3-1984. He contended that the duty concession admissible to such processed fabrics containing 67% Polyester Fibre and 33% cotton could not be denied on the grounds that the cellulosic or cotton content was eliminated due to the carbonisation treatment. In support of his arguments, he placed reliance on the following case law :-
1.
Collector of Central Excise v. Oriental Scientific Dyes - reported in 1989 (43) E.L.T. 689 (Tribunal) .
2. Amrit Banaspati Co. Ltd. v. Collector of Central Excise - reported in 1989 (44) E.L.T. 562 (Tribunal) .
3. Indian Rayon Corporation Ltd. v. Union of India and Ors. - reported in 1986 (25) E.L.T. 489 (Cal.) .
3. On behalf of the Revenue the learned JDR Shri J.N. Nair stated that even though the grey fabric manufactured by the appellants contained 67% Polyester fibre and 33% cotton, after carbonisation the cellulosic or cotton content is eliminated and the resultant fabric consists of 100% Polyester. He contended that the Polyester content of such fabrics being in excess of 67%, they were not eligible to the concessional rate of duty in terms of Notification No. 35/84-C.E., dt. 1-3-1984. He added that the assessment of such fabrics would depend on the composition of the final product and not on the contents of any intermediate product. In support of his contentions he placed reliance on the following decisions :
1.
Union of India and Ors. v. Ahmedabad Manufacturing and Calico Printing Co. Ltd. - reported in 1985 (21) E.L.T. 633 (SC) .
2. Sarangpur Cotton Mfg. Co. Ltd. v. CCE, Ahmedabad - reported in 1987 (31) E.L.T. 1018 (Tribunal) .
4. In reply to the points made by the learned JDR, the learned consultant Shri Kudav stated that the decision of the Supreme Court in the case of Union of India v. Ahmedabad Mfg. and Calico Printing Co. Ltd.
(supra) was not relevant to the facts of this case since in that case the fabrics produced at the intermediate and final stages were classifiable under Tariff Items 19 and 22 respectively whereas the intermediate and final products in the appellants case were classifiable under the same sub-heading of the Tariff.
5. We have examined the records of the case and considered the submissions made on behalf of both the sides. It is seen that the question that arises for examination in this case is whether the 100% polyester fabric produced by subjecting processed bleached, dyed or printed blended polyester cotton fabrics containing 67% Polyester and 33% cotton to further process of carbonisation could be deemed as continuing to be a blended fabric having less than 70% polyester contents covered by Notification No. 35/84-C.E., dated 1-3-1984. The appellants case is that even though the cotton or cellulosic fibres get dissolved and are not detectable on test as a result of the carbonisation process, the resultant fabric would still be treatable as blended polyester cotton fabric having less than 67% polyester on the basis of the composition of the base fabric which is subjected to carbonisation. In this regard, we find that in the case of Union of India and Ors. v. Ahmedabad Manufacturing and Calico Printing Co. Ltd., reported in 1985 (21) E.L.T. 633 , the Hon'ble Supreme Court has held that the classification of a manufactured product for the purpose of excise duty is dependent upon its nature and character at its final stage of production after all integral, incidental or ancillary processes of manufacture have been completed and the character of the goods at the intermediate stage of production cannot be taken into account for determining their classification under the Central Excises and Salt Act unless a contrary intention appears from the statute. It was further held that a fabric containing cotton and more than 60% by weight of artificial silk was classifiable under Item 22 of the Central Excise Tariff even if at the intermediate stage of its production it might have fallen under Tariff Item 19 of the Excise Tariff on account of the artificial silk content being less than 60%. Paragraphs 3 and 4 of the said judgment being relevant are reproduced below:
"3. Shri Govind Dass, learned counsel for the Union of India, in support of its contention relied upon the decision of the High Court of Gujarat in Vijay Textiles, a Partnership Firm at Plot No. 4, Nerol Abendaly v. Union of India -1979 (4) E.L.T. (J 181) . The petitioner in that case claimed before the High Court that the goods involved therein were liable to excise duty at the intermediate stage itself and excise duty was leviable under Item No. 68 and not under Item No. 19 or Item No. 22 perhaps because the total liability under Item No. 68 when compared with the excise duty either under Item No. 19 or under Item No. 22 was less at that stage. The High Court accepted the contention of the petitioner in that case. But in Empire Industries Ltd. and Ors. v. Union of India and Ors. - 1985 (20) E.L.T. 179 (SC) this Court has disapproved the decision in Vijay Textiles case (supra).
4. Having regard to the process involved in the manufacture of "Calikut Special" by the respondent we are of the view that it is not possible to hold that the character of the goods at the intermediate stage of production could be taken into consideration for determining the liability under the Act. The processes involved in the instant case after the intermediate stage referred to above formed an integral part of the manufacture of the product in question and the classification of the manufactured product for purposes of excise duty should depend upon its nature and character at its final stage of production unless a contrary intention appears from the statute. It is seen from clause (vii) of Section 2(f) of the Act which is, no doubt, introduced subsequently that bleaching, heat setting etc. are incidental and ancillary processes necessary for the completion of the manufactured product falling under Item No. 22. This amendment has only attempted to explain the obvious and to put the question beyond dispute. Therefore, even though the product in question might have fallen under Item No. 19 in the First Schedule to the Act at the intermediate stage of production, at the final stage when the duty became exigible it became taxable under Item No. 22 only. We are, therefore, in agreement with the decision of the High Court that the goods in question fell under Item No. 22 and not under Item No. 19 in the First Schedule to the Act for the purposes of payment of excise duty under the Act."
6. The fact that the fabric in question after being subjected to carbonisation process consisted of 100% Polyester has not been disputed by the appellants. Hence, on the ratio of the Supreme Court decision quoted above, it has to be held that its composition and character at the intermediate stage of production was not relevant for determining the duty liability and at the final stage of production being a fabric containing 100% Polyester, it was not eligible for the concessional rate of duty in terms of Notification No. 35/84-C.E., dated 1-3-1984.
7. The appellants have contended that the ratio of the Supreme Court decision in the case of Ahmedabad Manufacturing and Calico Printing Co. Ltd. was not applicable in their case since both the intermediate and the final products were classifiable under the same sub-heading of the tariff. In our view, this argument has no force at all since as held by the Apex Court the classification and dutiability of any item has to be determined only on the basis of its nature and character at its final stage. It, therefore, follows that character of the goods and consequently their classification at the intermediate stage would be irrelevant for determining their dutiability after completion of all integral process of manufacture. In support of their contentions the appellants have cited the decision of the Tribunal in the case of Collector of Central Excise v. Oriental Scientific Dyes (supra) in which it was held that man-made fabrics even when subjected to a single process of dying become excisable. The ratio of this decision does not help the appellants since in their case the processed blended fabrics containing 67% Polyester and 33% cotton are subjected to further carbonisation process resulting in their conversion into fabrics having 100% Polyester content. Hence on the ratio of the Supreme Court decision of Union of India v. Ahmedabad Manufacturing and Calico Printing Co. Ltd.
(supra) their dutiability has to be determined on the basis of their form and character after completion of the final carbonisation process. In the case of Amrit Banaspati Co. Ltd. v. Collector of Central Excise (supra) which has also been relied upon by the appellants the finding of the Tribunal was that the process of retrieving and/or segregating fibre from waste water can be considered as a process of manufacture. The appellants have also cited the case of Indian Rayon Corporation Ltd. v. Union of India and Ors.
(supra) in which the High Court had held that goods produced during exemption period are not liable to duty even if cleared after withdrawal of the exemption. The facts and the issues arising for determination in the case before us being different, these decisions cannot be of any assistance to the appellants.
8. In view of the foregoing the appeal fails and is rejected.