2003 (12) TMI 353 - AT - Central Excise

Summary

Issues:
Classification of woven pile fabric of man-made staple fiber for exemption under Notification 109/86.

Analysis:
1. The issue in this appeal is whether woven pile fabric of man-made staple fiber manufactured by the respondent is eligible for exemption under Notification 109/86. Both the adjudicating authority and the appellate authority found the respondent entitled to such exemption, leading to the Revenue filing an appeal.

2. The original authority classified the product under Chapter 5801.30 equivalent to sub-heading 55.07, granting exemption under Notification No. 109/86. However, the Revenue contended that the fabric should be classified under 5508.00 due to undergoing a process. The fabric is woven on a Gusken weaving machine and subjected to various processes like pile cutting, back scrapping, level cutting, and pile opening, among others, which the Revenue argued amounts to a manufacturing process.

3. The Revenue relied on two Supreme Court decisions, Siddeshwari Cotton Mills and Mafatlal Fine Spinning & Mfg. Co. Ltd., to support their argument that the process undergone by the fabric should disqualify it from the exemption. The Supreme Court in these cases clarified that processes should impart a lasting change to the fabric to affect its classification.

4. The Tribunal analyzed the process undergone by the fabric and concluded that it does not justify the product to be classified under Chapter 55.08, as it does not undergo a process that imparts a lasting change to the fabric. Therefore, the authorities below were justified in granting the exemption under Notification No. 109/86.

5. Consequently, the Tribunal affirmed the impugned order and dismissed the appeal, upholding the decision that the woven pile fabric of man-made staple fiber manufactured by the respondent is eligible for exemption under Notification 109/86.