2004 (3) TMI 624 - AT - Central Excise

Summary

Issues:
1. Whether woollen fabrics come into existence during the process of manufacture of blankets.

Analysis:
The appeal involved a crucial issue regarding the existence of woollen fabrics during the manufacturing process of blankets. The Appellant, M/s. Amritsar Swadeshi Woollen Mills, contested the Additional Excise duty imposed by the department under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The Appellant argued that the blankets produced had predetermined dividing lines and fringes at the loom stage, indicating their nature as blankets from the initial manufacturing phase. The Commissioner (Appeals) had dismissed the evidence provided by the Appellant, leading to the appeal before the Tribunal.

The Appellant's consultant, Shri R.L. Mehra, emphasized that the blankets were manufactured with specific features that clearly indicated their intended use as blankets. The Appellant also highlighted the Revenue neutrality of the situation, stating that any Additional Excise duty paid would be offset by Modvat credit under Rule 57A of the Central Excise Rules. On the other hand, the Respondent, represented by Shri Kumar Santosh, argued that blankets only come into existence after the cotton fabric is produced at an intermediate stage. The Respondent contended that goods consumed for manufacturing another product are deemed to have been removed from the factory as per Central Excise Rules.

After considering the arguments from both parties, the Tribunal examined the process of manufacture as detailed in a letter from the Central Excise Range. The letter confirmed that blankets were directly manufactured on the power loom with fringes or dividing lines, indicating the distinct nature of the products from the initial weaving stage. The Tribunal noted that the process remained consistent since 1997-98, with no transformation of woollen fabric occurring at an intermediate stage. Consequently, the Tribunal found that the Department failed to establish the existence of woollen fabric during the manufacturing process, leading to the allowance of the appeal in favor of the Appellant.

In conclusion, the Tribunal's judgment revolved around the critical issue of whether woollen fabrics were present during the manufacture of blankets. Through a detailed analysis of the manufacturing process and arguments presented by both parties, the Tribunal determined that the blankets' distinct features from the initial weaving stage indicated their nature as blankets, thereby ruling in favor of the Appellant and allowing the appeal against the Additional Excise duty imposed by the Department.