2007 (10) TMI 19 - AT - Central Excise

Dutiability The respondent procures woven pile fabrics under chapter heading 5801.21 and subject the same to the different process can t changed the Chapter Heading, hence do not amount manufacture Hence duty demand not sustained

Summary

Issues:
Department's appeal against Commissioner (Appeals) order dated 8-8-2006 - Duty liability on woven pile fabrics subjected to float cutting and brushing process.

Analysis:
The case involved a department's appeal against the order of the Commissioner (Appeals) regarding the duty liability on woven pile fabrics subjected to float cutting and brushing process. The respondent procured woven pile fabrics falling under chapter heading 5801.21 and processed them with float cutting and brushing using power-operated machines. The original authority held that these processes amounted to manufacture under Chapter Note VIII of Chapter 58, demanding duty of Rs. 2,33,122 and imposing penalties. However, the Commissioner (Appeals) referred to Board's instructions and held that the product continued to fall under Chapter Heading 5801.21, absolving the respondent of duty liability and allowing the appeal.

The department argued that the Board's instructions did not clarify that float cutting and brushing would not attract duty liability, seeking to set aside the Commissioner (Appeals) order. On the other hand, the respondent's advocate supported the Commissioner (Appeals) order, citing a Tribunal decision where no duty was sustained on pile fabric subjected to float cutting. The Tribunal analyzed the Board's instructions, stating that float cutting and brushing would not change the classification of woven pile fabrics from 5801.21 to 5801.22. As both raw materials and finished products fell under the same sub-heading, there was no justification for charging duty again under Heading 5801.21. The Tribunal rejected the appeal by the department, upholding the Commissioner (Appeals) decision.

In conclusion, the Tribunal's judgment clarified that the float cutting and brushing process did not alter the classification of the woven pile fabrics, maintaining that the duty liability under Chapter Heading 5801.21 was not applicable. The decision was based on the interpretation of the Board's instructions and the consistency of the product's classification throughout the processing stages.