1984 (3) TMI 392 - AT - Central Excise

Issues Involved:
1. Whether the calendered fabrics manufactured and cleared by the appellants were liable to be charged to duty during the material period.
2. Whether the demand for duty is hit by limitation.
3. Whether the appellants were entitled to exemptions under Central Excise Notifications Nos. 230/77, 231/77, and 80/76.
4. Whether Rule 9(2) of the Central Excise Rules was correctly invoked.
5. Whether the claim for freight and brokerage charges should be reconsidered.

Detailed Analysis:

1. Liability of Calendered Fabrics to Duty:
The primary issue was whether calendered fabrics were subject to duty. The appellants argued that calendering, a finishing process using a plain roller machine, did not constitute "processing" as per the Central Excise Tariff (CET) and thus should not attract duty. However, the Tribunal noted that calendering is recognized as a finishing process designed to smooth and flatten fabric, conferring surface glaze, and is thus a process within the textile industry. The Tribunal referred to the amendments made to Section 2(f) of the Central Excises and Salt Act and Item No. 19-I CET, which included "any other process" within the definition of "manufacture." The Tribunal concluded that calendering falls within this definition, making the calendered fabrics dutiable.

2. Demand for Duty and Limitation:
The appellants contended that the demand for duty was barred by limitation. The Tribunal examined the show cause notices and found that they were issued within the prescribed time limit. In the case of Siddeshwari Mills, the show cause notice was dated 12-11-1981 covering the period from 14-5-1981 to 19-9-1981. Similarly, for Jatia Mills, the notice was dated 10-11-1981 for the period from 12-5-1981 to 19-9-1981. Thus, the demands were within the statutory period, and the contention regarding limitation was dismissed.

3. Exemption under Notifications:
The appellants claimed exemptions under Notifications Nos. 230/77, 231/77, and 80/76. The Tribunal found that Notifications 230/77 and 231/77 exempted unprocessed cotton fabrics manufactured in powerlooms without processing plants. Since calendering was a process, the presence of a calendering machine in the appellants' factories disqualified them from these exemptions. Notification No. 80/76, which exempted fabrics subjected to certain finishing processes, was also found inapplicable as it applied only to factories solely engaged in calendering, which was not the case with the appellants.

4. Invocation of Rule 9(2):
The appellants argued that Rule 9(2) of the Central Excise Rules, which deals with clandestine removal of goods, was not applicable as there was no clandestine removal. The Tribunal observed that the appellants had manufactured and cleared excisable goods without following the prescribed excise formalities, thus contravening Rule 9(1). The Tribunal cited previous judgments and concluded that Rule 9(2) was correctly invoked in both cases.

5. Claim for Freight and Brokerage Charges:
In the case of Jatia Mills, the appellants sought reconsideration of their claim for freight and brokerage charges, which had been disallowed by the lower authorities. The Tribunal noted that the appellants had failed to provide sufficient evidence to substantiate their claim before the Collector and the Board. As no new material was presented at this stage, the Tribunal declined to remand the matter for fresh determination.

Conclusion:
Both appeals were rejected. The Tribunal upheld the duty demands and confirmed that the appellants were not entitled to the claimed exemptions. The invocation of Rule 9(2) was deemed appropriate, and the claim for freight and brokerage charges was not reconsidered due to lack of evidence.

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