2004 (6) TMI 137 - AT - Central Excise

Summary

Issues involved:
Whether man-made fabrics in stock as on 1-3-2001 were processed or not.

Detailed Analysis:

Issue 1: Processing of fabrics
The appellant argued that fabrics processed before 1-3-2001 should not attract duty under Section 3 of the Central Excise Act, as the duty under Section 3A was with reference to the factory, not the final stage of goods. They relied on Notification No. 19/2000-Central Excise, stating that fabrics processed with hot air stenter were subject to compounded duty. The appellant contended that fabrics processed before 1-3-2001 discharged duty liability, citing Trade Notice No. 18/2001. The Revenue argued that fabrics were incomplete without decatizing and folding, referencing Fair Child's Dictionary of Textile. They cited previous tribunal decisions to support their stance.

Issue 2: Duty liability
The tribunal considered the duty liability under Section 3A of the Central Excise Act, which required payment based on annual production capacity. The appellant claimed to have processed fabrics in February 2001, discharging duty liability. The Revenue contended that decatizing and folding processes were necessary, and fabrics were not fully processed by 28-2-2001. The tribunal upheld the duty demand, stating that fabrics must undergo all required processes to be considered processed textile fabrics. They clarified that duty was imposed on fully processed fabrics, not just after a specific process like hot air stenter. The penalty was set aside due to the interpretational nature of the issue.

In conclusion, the tribunal partially allowed the appeal, upholding the duty demand but setting aside the penalty. The judgment clarified that fabrics must undergo all required processes to be considered processed textile fabrics for duty purposes, emphasizing that duty is imposed on fully processed fabrics, not just after a specific process.