1994 (4) TMI 136 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the product under the Central Excise Tariff Act.
2. Applicability of Notification No. 109/86-C.E. for tax exemption.
3. Determination of whether the manufacturing processes qualify as "tentering" or "stentering."

Issue-wise Detailed Analysis:

1. Classification of the Product under the Central Excise Tariff Act:
The appellants, M/s. Maharashtra Fur Fabrics Ltd., classified their high fur fabrics under Heading 6001.90, attracting a nil rate of duty. However, the Superintendent directed classification under Heading 4301.00, attracting a 12% ad valorem duty. The appellants argued that their fabrics are knitted by the sliver knitting process and should be classified under Chapter 60, which specifically mentions knitted fabrics. They contended that Chapter 43 pertains to articles of fur and does not mention knitted fabrics. The Assistant Collector observed that the fabrics are predominantly made of man-made textile material (acrylic staple fibers) and classified the fabrics under Heading 6001.12, which relates to processed fabrics made predominantly of man-made textile material.

2. Applicability of Notification No. 109/86-C.E. for Tax Exemption:
The appellants argued that their product should benefit from Notification No. 109/86-C.E., which exempts knitted fabrics falling under Heading 58.01 or 60.01 from certain duties. The Assistant Collector, however, noted that the fabrics undergo processes such as back coating, shearing, and polishing, making them ineligible for the exemption under Notification No. 109/86-C.E. The Tribunal considered whether the processes carried out by the appellants were integral to the manufacture of knitted fabrics or constituted additional finishing processes.

3. Determination of Whether the Manufacturing Processes Qualify as "Tentering" or "Stentering":
The appellants contended that their process does not involve tentering or stentering, which are finishing processes. They provided a certificate from the manufacturer of their machine, stating that it is a special type of machine used for drying and not for tentering or stentering. The Tribunal examined the definitions and industry standards for tentering and stentering and concluded that the processes carried out by the appellants (dyeing, coating, knitting, back coating, shearing, polishing) are integral to the manufacture of knitted fabrics and do not constitute additional finishing processes.

Conclusion:
The Tribunal concluded that the appellants' knitted fabrics are not subjected to additional finishing processes and are, therefore, classifiable under Heading 55.07, which covers woven grey fabrics. Consequently, the appellants are eligible for the benefit of Notification No. 109/86-C.E., as amended by Notification No. 3/88-C.E. The appeal was allowed, and the classification under Heading 6001.12 was upheld, granting the appellants the tax exemption benefits.