2004 (11) TMI 169 - AT - Central Excise

Summary

Issues:
Challenge to duty demand against respondents for knitted pile fabric clearance without payment of duty.

Analysis:
The appeal involved a challenge by the Revenue against the order-in-original dropping duty demand for knitted pile fabric clearance by the respondents. The respondents were engaged in manufacturing knitted fabric and hosiery goods, using acrylic fiber, cotton/polyester thread, dyes, and chemicals. The Revenue alleged that the respondents cleared knitted pile fabric as knitted cloth without paying duty. However, the Commissioner concluded that the fabric was unprocessed and exempt under specific notifications, hence no duty was confirmed.

The central issue revolved around whether the knitted pile fabric cleared by the respondents was processed or unprocessed. The definition of manufacture in Chapter Note 4 to Chapter 60 of the CETA was crucial. The processes undertaken by the respondents included carding, knitting, shearing, and back-coating. The Tribunal found that these processes did not amount to manufacture under Chapter Note 4, as they were not covered by the listed processes. Previous judgments were cited to support this interpretation.

The contention that the processes carried out by the respondents constituted "any other processes" under Chapter Note 4 was rejected. The Tribunal applied the principle of ejusdem generis to interpret the term, concluding that the processes undertaken did not align with those specified. The process of back coating and drying was also analyzed, with the Tribunal determining that it did not amount to manufacture as defined in the CETA.

The Tribunal dismissed the reliance on previous case law and circulars, finding that they did not support the Revenue's case. It was emphasized that the processes undertaken by the respondents did not meet the criteria for dutiability under the relevant notifications. The Tribunal upheld the Commissioner's findings, noting that the duty demand had been rightly dropped against the respondents based on the lack of evidence supporting dutiability. The appeal of the Revenue was dismissed for lacking merit.

In conclusion, the judgment delved into the intricacies of the manufacturing processes undertaken by the respondents, the interpretation of relevant legal provisions, and the application of precedent to determine the dutiability of the knitted pile fabric. The decision hinged on whether the processes amounted to manufacture as defined in the CETA, with the Tribunal ultimately ruling in favor of the respondents based on the lack of evidence supporting duty imposition.