2016 (2) TMI 716 - AT - Central Excise

Conversation of saree into a designer saree - whether such conversion is not a process of manufacture as per Section 2 (f) of the Central Excise Act, 1944 - duty demand - Held that - We are also in agreement with the finding of the learned Commissioner (Appeals) and hold that as the respondent had purchased sarees and did embroidery and hemming work thereon will not change the character of sarees, therefore, the activity undertaken by the respondent does not amount to manufacture as per Section 2 (f) of Central Excise Act, 1944, consequently, not excisable. In these terms, we do not find any infirmity in the impugned order, therefore, appeal filed by the Revenue is dismissed. - Decided in favour of assessee

Summary

Issues:
Classification of designer sarees under Central Excise Act, 1944 as a process of manufacture.

Analysis:
The case involves a dispute over the classification of designer sarees under the Central Excise Act, 1944. The appellant, Revenue, challenged an order stating that the conversion of sarees into designer sarees does not constitute a process of manufacture as per Section 2 (f) of the Act. The respondent, a fashion designer, was accused of clearing designer sarees without duty payment. The adjudicating authority classified the sarees under Chapter Heading 6307.90 as made-ups based on extra work contributing greater thickness to the cloth. The Commissioner (Appeals) set aside this order, leading to the Revenue's appeal.

The appellant relied on CBEC Circular No. 557/53/2000-CX to argue that the sarees were unhemmed, thus falling under CTH 6307.90. However, the respondent did not appear for the hearing, and the impugned order was reviewed. The Commissioner (Appeals) noted that the respondent had performed embroidery and hemming work on duty-paid sarees purchased from the market. This fact was not disputed by the appellant, leading to a conclusion that the CBEC Circular did not apply to the case. The Commissioner (Appeals) referenced judicial precedents, including a Supreme Court judgment, to support the finding that the processes undertaken did not result in a new article with distinct characteristics.

Ultimately, the Tribunal agreed with the Commissioner (Appeals) that the activities performed by the respondent did not amount to a process of manufacture under Section 2 (f) of the Central Excise Act, 1944. The Tribunal held that the character of the sarees remained unchanged despite the additional work done, making them non-excisable. Therefore, the appeal filed by the Revenue was dismissed, upholding the impugned order.