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2017 (1) TMI 649 - AT - Central ExciseManufacture - garnetting of synthetic filament/fibre waste - Held that - as regards the processing of carding and garneting of textile waste, this Tribunal in the case of Collector of Central Excise v. Amritsar Swadeshi Woollen Mills 1989 (6) TMI 122 - CEGAT, NEW DELHI has clearly held that the process does not amount to manufacture. Prior to insertion of Chapter Note 3 it was clearly held in Amritsar Swadeshi Woollen Mills 1989 (6) TMI 122 - CEGAT, NEW DELHI that garneting is not amounting to manufacture. Subsequently, even after insertion of Chapter Note 3 which does not provide the process of garneting/carding amounts to manufacture the process remain as non-manufacturing activity. We are, therefore, of the considered view that the process of garneting/carding of textile waste does not amount to manufacture and hence not liable to duty. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the garneting process of synthetic filament/fibre waste amounts to manufacture under Chapter Note 3 of Chapter 55 of the Central Excise Tariff Act, 1985. 2. Whether the extended period of limitation under Section 11A is applicable in this case. Detailed Analysis: 1. Garneting Process as Manufacture: The primary issue is whether the garneting process of synthetic filament/fibre waste constitutes manufacture under Chapter Note 3 of Chapter 55 of the Central Excise Tariff Act, 1985. The Revenue contended that the garneting process, which involves clearing, stretching, and cutting of fibre, makes the waste capable of being spun into yarn, thereby amounting to manufacture. The appellant argued that their process of garneting does not amount to manufacture. They referenced their classification declaration under Rule 173B, where the jurisdictional Range Superintendent and the Assistant Collector of Central Excise had previously clarified that garneting/carding does not amount to manufacture as per CBEC Circular No. 91/2/95-CX dated 13/01/1995. The appellant also cited several judgments, including Collector of Central Excise v. Amritsar Swadeshi Woollen Mills, where it was held that garneting is not a manufacturing process but a spinning process, as it does not result in a different commercial commodity. The Tribunal considered these submissions and reviewed the relevant judgments. It was noted that the process of garneting, as defined, involves breaking up material to return it to a fluffy fibrous condition, which does not result in a new commercial commodity. The Tribunal also examined Chapter Note 3, which includes waste of synthetic staple fibres or filaments after they have been carded, combed, or otherwise processed for spinning. However, the Tribunal found that this note is for classification purposes and does not declare garneting/carding as a manufacturing process. The Tribunal further compared Chapter Note 3 with Chapter Note 4, which explicitly states certain processes amount to manufacture. The absence of such a declaration in Chapter Note 3 led the Tribunal to conclude that garneting/carding does not amount to manufacture. The Tribunal referenced the Supreme Court's decision in Shyam Oil Cake Ltd, which emphasized that for a process to be considered manufacture, it must be explicitly stated in the Chapter Note or Tariff Item. 2. Extended Period of Limitation: The appellant contended that the extended period of limitation under Section 11A was not applicable as there was no suppression of facts. They argued that the department was aware of their activities, as evidenced by the chain of correspondence and the RTI reply indicating no registration requirement for similar processes. The Tribunal, having decided the matter on the merits that garneting/carding does not amount to manufacture, found it unnecessary to delve into the issue of limitation. Conclusion: The Tribunal concluded that the process of garneting/carding of synthetic filament/fibre waste does not amount to manufacture under Chapter Note 3 of Chapter 55 of the Central Excise Tariff Act, 1985. Consequently, the goods are not excisable, and the demands raised were set aside. The appeals were allowed, and the impugned orders were annulled.
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