Customs, Excise and Gold Tribunal - Delhi
Mafatlal Fine Spg. And Weaving Co. Ltd vs Collector Of Central Excise on 10 December, 1987
Equivalent citations: 1988ECR9(TRI.-DELHI), 1988(33)ELT704(TRI-DEL)
ORDER
G. Sankaran, Senior Vice President (T)
1. The facts giving rise to this appeal, in brief, are that the appellants are engaged in the manufacture of cotton fabrics. Central Excise Notification No. 80/76 dated 16-3-1976 exempts cotton fabrics from the whole of the excise duty leviable thereon when subjected to the finishing processes specified therein. Calendering and cropping (shearing) are amongst the processes specified. The appellants were availing themselves of the facility of Central Excise Rule 49A which provides for deferment of payment of excise duty leviable on yarn till the time of clearance of the fabrics manufactured therefrom. This is subject to the condition that when cotton fabrics are cleared in grey (unprocessed) condition, 1-1/2% of the yarn duty is also paid by way of interest on the deferred duty and that 3% of such duty is paid as interest if the fabrics are cleared after processing. The appellants were subjecting the grey fabrics manufactured by them to the processes of calendering and shearing. The lower authorities held, therefore, that the appellants were liable to pay interest at 3% of the yarn duty and not at 1-1/2%. It is against the Collector (Appeal's) order rejecting the appeals against the Assistant Collector's orders that the appellants are now before us.
2. The appellants have furnished written submissions and have requested that the appeals be decided on that basis. Accordingly, they did not appear at the hearing of the appeals. We have perused the records and heard Shri Balbir Singh, Sr. D.R. for the respondent.
3. The main contention for the appellants is that shearing and calendering cannot be equated with processes such as bleaching, dyeing, printing, etc. but are merely finishing processes. Grey fabrics subjected to these finishing processes cannot be termed processed fabrics and they continue to be grey fabrics. Relying on certain authorities, it is submitted that shearing and calendering are activities which cannot be regarded as processes incidental or ancillary to the completion of the manufactured product viz. grey fabrics.
4. In Siddeshwari Cotton Mills Ltd. and Anr. v. Collector of Central Excise, Calcutta 1984 (18) ELT 297, this Tribunal held that calendering was a finishing process which would fall within the ambit of the expression "any other processes" occurring in Section 2(f) of the Central Excises and Salt Act in relation to Item No. 19 of the Central Excise Tariff Schedule. The argument that fabrics cleared after calendering are known in the trade as grey fabrics was also noticed in the aforesaid decision. It was also noted that the tariff did not employ the word "grey", the classification being on the basis whether the fabric was subjected to any process or not. (We may note here that Central Excise Rule 49A uses the term "grey" synonymously with the term "unprocessed.) Further, the definition of "grey goods" in the book "Textile Terms and Definitions" by the. Textile Institute, Manchester, namely, "woven or knitted fabrics as they leave the loom or knitting machine, i.e., before any bleaching, dyeing or finishing treatment has been given to them", was also noted and the conclusion was reached that calendered fabric was not, therefore, grey goods. We also note that the book "fairchild's Dictionary of Textiles" defines the terms "grey goods" ("greige") as a "term used to describe fabrics in the unfinished state, after they have been woven and before dyeing or finishing". The latter book also describes calendering and cropping (shearing) as finishing processes. These processes, among others, are referred to as finishing processes in Notification No. 80/76 also.
5. Recently in Order No. 786 & 787/87-D, A.No. ED/SB/1160/83-D and Anr. in Madura Coats Ltd. v. Collector of Central Excise, Madurai, the issue was similar to the one in the present appeals though it was limited to cropping (shearing). The principle, however, would apply to calendering as well. It was held that it is not necessary for the purpose of Notification No. 80/76 to consider the question whether cropping was a process incidental or ancillary to the completion of manufacture of cotton fabrics. What the notification said was that unprocessed cotton fabrics when subjected to the finishing processes specified therein in the same factory where the unprocessed fabrics are produced are not eligible for the exemption. It was further held that in this view of the matter, the demand for differential interest in terms of Central Excise Rule 49A which provides that where cotton fabrics are cleared after processing, 3% of the duty payable on the yarn shall be payable by way of interest on the amount of yarn duty, was justified.
6. In the light of the above decision, the appellants' contention is untenable. The impugned orders are upheld and the appeals dismissed.