Embossing and Pleating - Central Excise - Order No. 52/6/98-CX.

Order No. 52/6/98-CX. Dated 21-1-1998 [From F. No. 55/02/97-CX. 1] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Representations have been received from the trade stating that embossing and pleating done on duty paid fabrics does not amount to manufacture under Section 2(f) of the Central Excise Act, 1944 and therefore no further duty is leviable. Representations are based on CEGAT's Order dated 22-1-90 in the case of M/s. Ronuk Manufacturing Co., Bombay which discussed the Supreme Court Judgment in the case of M/s. Siddheshwari Cotton Mills Pvt. Ltd., [1989 (39) E.L.T. 498 (S.C.)]. Supreme Court in the said judgment held that in order to fall within the meaning of 'any other process' amounting to manufacture, a process should be one which imparts a change of lasting character to the fabric. The tribunal held that embossing is of very temporary character and disappears after few washing and ironing and therefore would not fall within the meaning of any other process amounting to manufacture. 2. The Board has earlier examined the durability of pleated fabrics made out of duty paid processed fabric in consultation with the Chief Chemist, CRCL, New Delhi. This opinion of Chief Chemist in which the process of pleating was described in detail was enclosed with letter F. No. 54/6/96-CX. 1, dated 24-4-97, clarifying that pleating of fabric would amount to manufacture. 3. The process of pleating of fabric is done by subjecting the fabric to force, usually length-wise and is accomplished by use of steam pressure/heat setting process. The method and technique by which the pleating is carried out may vary to a considerable extent but the basic condition with respect to time, temperature and pressure are regulated according to the requirement. The pleating effect on the fabric is combined effect of localised mechanical deformations/folding of the fabric and its shrinking and setting by application of hot roll. 4. The embossing on fabrics is done by embossing machines which consist of two rollers one of which is a hollow engraved steel roll heated from inside by electrical heating elements. The other is a solid paper bowl (roll) exactly twice the size of the engraved roll. The engraved steel roll in deep relief revolves against a paper roll. The hot engraved areas of the roll produce a pattern on the fabric. The temperature is adjusted to suit the fabric which is then passed between the rolls with mechanical pressure between the two rolls. Thus embossed design is achieved on the fabrics. 5. The processes of embossing and pleating are commercially well known processes which are carried out for specific purposes to give the fabrics the desired effects. These processes add substantially to the visual appeal, feel, value and marketability of the fabrics and result in making the embossed or pleated fabric commercially distinct from the base fabrics. The effect so produced on the base fabrics by embossing or pleating cannot be considered as superficial. The embossing or pleating on the fabric is not known to disappear on its own i.e. within a reasonable period of time of normal use, say 2-3 years, even after ironing or dry-cleaning. 6. The Board has also taken note of the fact that tentering and heat setting are processes which may not bring lasting changes in man-made fabrics and has been included in the definition of manufacture under Chapter Notes subsequent to the period which was involved in the case of Siddheshwari Cotton Mills decided by the Supreme Court under old Tariff Item 19. Even sometimes the processes like dyeing and printing may not last for ever, but they are treated as processes amounting to manufacture. 7. In these circumstances, the Board is of the view that there is no conflict with the Supreme Court decision in the case of Siddheshwari Cotton Mills in considering the process of pleating and embossing of fabric amounts to manufacture. 8. Now, therefore, for the purpose of ensuring uniformity in the assessment of the said goods, the Central Board of Excise Customs, in exercise of the powers under Section 37B of the Central Excise Act, 1944 (1 of 1944), hereby clarifies that the process of embossing and pleating on fabrics amounts to manufacture under Section 2(f), ibid. 9. This order shall not change the position for the past closed assessments. 10. The Board further directs that copy of this order be sent to all Commissioners, who shall issue appropriate trade notice and inform all officers employed in the execution of the provisions of the Central Excise Act.