1996 (8) TMI 195 - AT - Central Excise

Summary

Issues:
1. Whether handloom cess is chargeable on HDPE (coated/laminated fabrics) under the Khadi and other Handloom Industries Development Act, 1953.

Analysis:
The appellants challenged the order of the Collector, Central Excise, which demanded Additional Excise Duty (handloom cess) on HDPE fabrics coated/laminated and cleared by them during a specific period. The appellants contended that handloom cess was not applicable to man-made fabrics like HDPE, citing exemptions under various notifications. The department issued a show cause notice to the appellants, alleging non-payment of duty on the goods. The appellants argued that HDPE fabrics were exempted from duty under specific notifications and that the demand was time-barred. However, during the hearing, no one appeared for the appellants, and the matter proceeded.

The learned DR argued that handloom cess was applicable to all fabrics, including HDPE, based on the definition of 'cloth' in the Cess Act. He cited a previous Tribunal case to support that cloth is synonymous with fabrics for levy of handloom cess. The DR contended that even though certain varieties of cloth were exempted under a notification, processed man-made fabrics were still liable for cess. He specifically mentioned that coated/laminated HDPE fabrics fell under processed man-made fabrics and hence were subject to handloom cess. Therefore, the DR urged the Tribunal to reject the appeal.

After considering the submissions and examining the case records, the Tribunal analyzed the definition of 'cloth' under Section 2(b) of the Act, which did not include HDPE fabrics. As HDPE fabrics were not covered in the definition, the Tribunal concluded that handloom cess was not chargeable on HDPE fabrics, whether laminated or not. Since no handloom cess duty was applicable to HDPE fabrics, the other arguments raised by the appellants became irrelevant. Consequently, the Tribunal allowed the appeal in favor of the appellants, ruling that handloom cess was not leviable on HDPE fabrics.

This judgment clarifies the applicability of handloom cess under the Khadi and other Handloom Industries Development Act, 1953 to HDPE fabrics, emphasizing the interpretation of the term 'cloth' and the exemptions provided under relevant notifications. The Tribunal's decision provides a significant precedent regarding the scope of handloom cess on different types of fabrics, specifically addressing the classification and taxation of man-made fabrics like HDPE under the Cess Act.