1990 (9) TMI 182 - AT - Central Excise

Summary

Issues:
1. Whether the process of calendering fabric with plain rollers amounts to manufacture under Section 2(f) of the Central Excises and Salt Act, 1944.
2. Whether the demand for Central Excise duty on calendered fabric is time-barred.

Detailed Analysis:
1. The appellants sought to raise additional grounds in the Appeal Memorandum, arguing that calendering fabric with plain rollers does not create a commercially different product and does not constitute manufacture under the law. The Collector held that the appellants were engaged in calendering grey cotton fabrics and hand-bleached cotton cloth with plain rollers and damping. The Collector denied the benefit of a notification to the appellants, confirming a duty demand and imposing a penalty. The appellants contended that calendering, including damping, did not amount to manufacture based on legal precedents and that the duty demand was time-barred.

2. The Tribunal analyzed the process of calendering and damping in detail. The Collector's observations on the necessity of damping before calendering were scrutinized, citing technical literature supporting the requirement of damping in calendering operations. Legal precedents were referenced, including a Supreme Court judgment and a Tribunal decision, holding that calendering fabric with plain rollers did not amount to manufacture under the Central Excises and Salt Act, 1944. The Tribunal found that the process of calendering and damping, akin to wetting clothes before ironing, did not change the fabric's fundamental characteristics, thus not attracting Central Excise Duty.

3. Regarding the limitation issue, the Tribunal noted that the show cause notice did not allege suppression or misstatement of facts. The notice was issued within the prescribed period, but the appellants argued that the calendering process was disclosed and verified by Central Excise officers, indicating no deliberate concealment. The Department failed to rebut these contentions during the hearing, leading the Tribunal to conclude that the demand for duty was indeed time-barred. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting relief to the appellants.