1999 (3) TMI 141 - AT - Central Excise

Summary

Issues:
1. Duty demand on embroidered grey fabrics processed by the appellant.
2. Interpretation of the term "manufacture" under Section 2(f) of the Act.
3. Applicability of the extended period under the proviso to Section 11A.
4. Relevance of notes in the tariff to determine manufacturing processes.
5. Impact of the introduction of Note 8 to Chapter 58 in 1995.

Analysis:
1. The appellant, engaged in processing textile fabrics, faced duty demands on embroidered grey fabrics processed between 1-3-1986 to 28-2-1989. The duty was imposed due to bleaching and dyeing processes on the fabrics, deemed as manufacturing by the department.

2. The appellant argued that processing fabrics does not constitute "manufacture" under Section 2(f) of the Act. They highlighted the significance of Notes to the Chapter in determining manufacturing processes, citing examples from the tariff to support their position.

3. The appellant contended that the extended period under the proviso to Section 11A should not apply. They had informed the department about fabric receipts and processing intentions, and the notice to show cause lacked specificity on invoking the extended period.

4. The presence of specific notes in the tariff, such as Note 7 in Chapter 58, was crucial in determining manufacturing processes. The tribunal noted that the absence of deeming fiction in the notes meant that processes like bleaching and dyeing did not amount to manufacture unless specified.

5. The introduction of Note 8 to Chapter 58 in 1995 clarified that certain processes on fabrics would amount to manufacture, impacting duty liability. As Note 8 was introduced after the period in question, the tribunal ruled in favor of the appellant, stating no duty was payable.

6. The tribunal, therefore, did not delve into the limitation arguments and allowed the appeal, setting aside the impugned order. The judgment emphasized the importance of specific tariff notes in determining manufacturing processes and duty liability, providing clarity on the appellant's case.