2002 (12) TMI 298 - AT - Central Excise

Summary

Issues Involved:
1. Whether Dobby Cards are chargeable to Excise duty.
2. Whether the benefit of notification No. 67/95-C.E. is available to Dobby Cards.

Analysis:

Issue 1: Chargeability of Dobby Cards to Excise Duty
The appeal raised the question of whether Dobby Cards are subject to Excise duty. The Appellant argued that the process of cutting and punching Myler Sheets to create Dobby Cards does not result in the emergence of a new excisable item. It was contended that Dobby Cards are not standard items available in the market but are specific to designs and purposes. The Appellant further claimed that if Dobby Cards are deemed excisable, they should benefit from Notification No. 67/95-CE, which exempts certain goods from duty payment. The Department argued that the process of creating Dobby Cards results in a new identifiable product essential for fabric design. The Tribunal found merit in the Department's argument, holding that the process undertaken by the Appellants constituted manufacture, as per the Supreme Court's criteria. Consequently, Dobby Cards were held chargeable to Excise duty.

Issue 2: Availability of Notification No. 67/95-C.E. Benefit
The second issue addressed whether the Appellants could avail themselves of the exemption under Notification No. 67/95. This notification excludes Chapter 55 items from its scope. The Appellants claimed that since Dobby Cards were used for both Chapter 51 and Chapter 55 products, they should benefit from the notification. The Tribunal noted that it was unclear whether all Dobby Cards were used for both chapters, necessitating a factual determination by the Adjudicating Authority. The matter was remanded for further examination. Additionally, the Tribunal agreed that if duty payment on Dobby Cards was upheld, the Appellants could claim Modvat credit for inputs used in their manufacture, subject to satisfying the Adjudicating Authority. The question of imposing penalties was also remanded for consideration alongside the eligibility of Dobby Cards for Notification No. 67/95.