2000 (12) TMI 359 - AT - Central Excise

Summary

Issues:
Assessment of Central Excise duty on processed fabrics with less than 70% polyester content before carbonisation. Interpretation of Notification No. 4/97-C.E. dated 1-3-1997 regarding exemption for fabrics containing polyester and cotton.

Analysis:
The appeal before the Appellate Tribunal involved the issue of whether Central Excise duty should be assessed on processed fabrics with less than 70% polyester content before the carbonisation process. The respondents, M/s. Dhan Laxmi Mills, Pali, were engaged in processing man-made textile materials and other fabrics without power. The Revenue contended that duty should have been paid at the stage when the polyester content was less than 70%, as the final fabric with 100% polyester content was exempt from duty. The Commissioner, Central Excise (Appeals), had ruled in favor of the respondents, stating that since the fabric cleared had 100% polyester content, no duty was chargeable under Notification No. 4/97-C.E. dated 1-3-1997, which provided exemption for fabrics with less than 70% polyester content.

The Tribunal considered the arguments presented by both parties. It was noted that duty was charged on the finished fabric after processing, including bleaching, dyeing, and printing, and not at every stage of production. The process of carbonisation required the cotton content in the fabric to be burnt out, resulting in a fabric with 100% polyester content. The Tribunal found that the fabric with cotton content was fully consumed internally and not cleared for outside consumption, indicating a continuous process where the fabric with cotton content was not a raw material for the finished carbonised fabrics. Therefore, the Tribunal upheld the decision of the Appellate Authority, stating that no interference was warranted in the view taken. Consequently, the appeal filed by the Revenue was deemed meritless and rejected.

In conclusion, the Tribunal's judgment clarified the application of Central Excise duty on processed fabrics with varying polyester content before the carbonisation process and interpreted the provisions of Notification No. 4/97-C.E. dated 1-3-1997 regarding the exemption for fabrics containing polyester and cotton. The decision emphasized the assessment of duty on the final product after processing and the technical necessity of the carbonisation process in transforming the fabric to have 100% polyester content.