1989 (6) TMI 171 - AT - Central Excise

Summary

Issues:
Violation of Central Excise law by manufacturing and clearing calendered cotton fabrics without necessary formalities and duty payment. Interpretation of "manufacture" under Central Excises & Salt Act. Applicability of "any other process" in Section 2(f)(v) of the Act and Item 19I(b) of the CET. Determination of whether plain-roller calendering constitutes a process of manufacture. Consideration of lasting change imparted by calendering process. Relevance of previous judgments on similar issues.

Detailed Analysis:

1. The case involved the appellants being charged with violating Central Excise law by manufacturing and clearing calendered cotton fabrics without a license, statutory records, price list, and duty payment. The Collector directed them to pay duty and imposed a penalty, which was confirmed by the Central Board of Excise and Customs and the Tribunal. The Tribunal held calendering as a manufacturing process under Section 2(f) of the Act.

2. The appellants challenged the Tribunal's order in the Supreme Court, which set aside the order and remitted the appeal for fresh disposal. The Court emphasized that "any other process" in Section 2(f)(v) must share characteristics of preceding processes like bleaching or dyeing. The Court required the Tribunal to determine if the calendering process satisfied this test.

3. An application for additional evidence was filed but not pressed. The appellants argued that the Supreme Court's decision in another case established that plain-roller calendering was not a manufacturing process, which applied to their case.

4. The Department contended that even if the process was plain-roller calendering, it would render the fabric dutiable. The appellants argued that the previous judgments and the nature of the calendering process supported their position.

5. The Tribunal considered submissions from both sides, noting the appellants' contentions regarding the nature of their calendering machines and the temporary finish imparted by the process. Technical authorities were referenced, and previous judgments were discussed to determine the nature of the calendering process.

6. The Tribunal examined various technical definitions and authorities to understand calendering as a process. It concluded that the calendering process applied by the appellants did not amount to "any other process" as per the Act and the CET, as it did not impart a lasting change to the fabric.

7. The Tribunal referred to a previous Supreme Court judgment regarding calendering and steaming of fabrics, emphasizing that the calendering process should result in a lasting change to be considered a manufacturing process. The Tribunal found that the temporary finish from calendering did not alter the fabric permanently.

8. The Tribunal applied the Supreme Court's decision on calendering and its impact on fabric classification. It distinguished the present case from previous judgments cited by the Department, concluding that the calendering process employed by the appellants did not amount to a manufacturing process, resulting in the appeal being allowed in favor of the appellants.