1985 (7) TMI 212 - AT - Central Excise

Issues Involved
1. Classification of bed-sheets, bed-covers, and table linen under Central Excise Tariff Item 19.
2. Whether the processes of cutting, hemming, and stitching constitute "manufacture."
3. Applicability of differential duty under Item 19 of the Central Excise Tariff.
4. Interpretation of the term "cotton fabrics" in the context of Tariff Item 19.
5. Relevance of retrospective amendments to Tariff Item 19 and Section 2(f)(v) of the Central Excises and Salt Act, 1944.
6. Applicability of the principle of Ejusdem Generis and contemporanea expositio.

Detailed Analysis

Classification Under Central Excise Tariff Item 19
The primary dispute was whether bed-sheets, bed-covers, and table linen made from duty-paid dyed/printed cotton fabrics in running length should pay differential duty under Item 19 of the Central Excise Tariff. The appellants contended that these items should not be liable to additional duty as they were already duty-paid under Item 19-I(b).

Processes Constituting "Manufacture"
The appellants argued that the processes of cutting, hemming, and stitching did not amount to "manufacture." However, the lower authorities and the Department's representative held that these processes resulted in new and distinct items, thus constituting manufacture. The Tribunal agreed, citing the Supreme Court's judgment in Empire Industries Ltd., which stated that "manufacture" occurs when a new commodity with a distinct name, character, and use is created.

Applicability of Differential Duty
The Tribunal upheld the lower authorities' decision that the appellants were liable to pay differential duty. Although the appellants could take credit for the duty already paid on the cloth in running length, they had to pay the net differential duty corresponding to the value added on the new articles.

Interpretation of "Cotton Fabrics"
The appellants contended that the term "bed-sheets" in Tariff Item 19 referred to the quality of the cloth, not the made-up pieces. The Tribunal rejected this argument, stating that bed-sheets, bed-covers, and table-cloths are distinct commercial products and not the same as fabrics in running length. The Tribunal emphasized that the definition of "cotton fabrics" in the tariff entry included these made-up articles.

Relevance of Retrospective Amendments
The appellants argued that the retrospective amendments to Tariff Item 19 and Section 2(f)(v) of the Central Excises and Salt Act, 1944, should not affect their case. The Tribunal found this argument irrelevant, noting that bed-sheets and similar items were already specified as excisable goods before the amendments.

Principle of Ejusdem Generis and Contemporanea Expositio
The appellants invoked the principle of Ejusdem Generis, arguing that "any other process" in Item 19-I(b) should refer only to textile finishing processes. The Tribunal dismissed this, stating that the words "any other process" should be given their natural meaning. The appellants also cited Tariff Advices from the Central Board of Excise and Customs, but the Tribunal held that these advices related to different products (towels and blankets) and could not be applied to bed-sheets.

Conclusion
The Tribunal found no merit in any of the appellants' arguments and upheld the impugned orders, rejecting the appeal. The processes of cutting, hemming, and stitching were deemed to constitute manufacture, and the appellants were liable to pay the differential duty under Item 19-I(b) of the Central Excise Tariff.

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