2011 (3) TMI 244 - SC - Central Excise

Classification - Since the Respondent carries out only the processing work as indicated above on the embroidered fabrics received by it, whether or not the Respondent is carrying on any work of embroidery is another issue that is also required to be considered - These are issues which require de novo consideration by the Tribunal in the light of all the relevant provisions of law. All these issues also go to the root of the dispute in question and, therefore, they are required to be considered and decided by the Tribunal.

Summary

Issues involved: Classification of processing work on embroidery under sub-heading 5805.90 or 5805.19, interpretation of relevant provisions of Central Excise Tariff Act, consideration of whether the processing work amounts to manufacturing, determination of whether machinery is used in the processing work, and assessment of whether the respondent is carrying out embroidery work.

In this judgment, the appellant contended that the Customs, Excise & Service Tax Appellate Tribunal was incorrect in classifying the processing work on embroidery by the respondent under sub-heading 5805.90, arguing that it should be classified under sub-heading 5805.19 based on Note Nos. 5 and 8 of Chapter 58 of the Central Excise Tariff Act, 1985. Note No. 5 defines "embroidery" to include work with metal or glass thread on textile fabric, while Note No. 8 states that processes like bleaching, mercerising, dyeing, etc., amount to "manufacturing." The appellant asserted that even dyeing and bleaching of embroidery constitutes manufacturing and should be excisable under sub-heading 5805.19.

The respondent, however, contended that they do not perform embroidery work but receive embroidered fabrics on which they carry out processing like bleaching, mercerising, and dyeing. They argued that since these processes are not done by machinery, the goods should not be classified under Central Excise Tariff Heading No. 5805. The key issue to be resolved is whether the processing work on embroidery, including dyeing, bleaching, and printing on grey fabrics, amounts to manufacturing and should be classified under sub-heading 5805.19. The Tribunal's decision was based on a previous case and did not effectively consider all relevant provisions, including whether machinery is used in the processing work and if the respondent is engaged in embroidery work.

The Supreme Court found that the Tribunal's decision was not comprehensive and set it aside, remitting the matter back to the Tribunal for a fresh consideration of all issues. The Court highlighted that the issues regarding classification, manufacturing, use of machinery, and the nature of work carried out by the respondent need to be re-evaluated in light of all relevant legal provisions. The Court emphasized the importance of a thorough examination of these issues for a proper resolution of the dispute.