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TMI Blog2010 (10) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... , a permanent or lasting change is brought about in the fabric. - said processes do not amount to "manufacture" in terms of Note 4 of Chapter 60 of the Tariff Act - 1689-1690 of 2003/ 4541 of 2005 - - - Dated:- 22-10-2010 - D.K. Jain and C.K. Prasad, JJ JUDGEMENT D.K. Jain, J: 1. These appeals filed by the Revenue under Section 35-L(b) of the Central Excise Act, 1944 (for short "the Act") are directed against the order and judgment dated 21st August 2002 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, (for short "CEGAT"), as it existed then, and the order and judgment dated 8th November 2004 passed by the Custom, Excise and Service Tax Appellate Tribunal (for short "CESTAT"), whereby both the CEGAT and CESTAT rejected the claim of the Revenue and held that the goods manufactured by the assessee were "unprocessed knitted pile fabrics" classifiable under chapter sub-heading 6001.12 of the Central Excise Tariff Act, 1985 (for short "the Tariff Act"), attracting Nil rate of duty. 2. Since the question of law arising for our consideration in all the appeals is similar, these are disposed of by this common judgment. However, for the purpose of appreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Bombay (1989) 2 SCC 446: 1989 (40) ELT 218 (SC), the Commissioner allowed the appeal of the assessee. 5. Aggrieved by the said order, the Revenue preferred an appeal before the CEGAT. As mentioned previously, the CEGAT, vide impugned order, dismissed the appeal. Relying on the decision of this Court in Mafatlal (supra), the CEGAT held that operations of shearing, cropping and back coating of the fabric undertaken by the assessee did not amount to processing of the fabric, as contemplated in the said Chapter Note. 6. It would be expedient to mention that in C.A. No.4541 of 2005 relating to the same assessee, the Commissioner, vide Order-in-Original No.69/CE/JAL/03 dated 30th July 2003, who had adjudicated on the show cause notice dated 22nd June 2001, after examining the processes carried out by the respondents, had concluded that the knitted pile fabric manufactured by the assessee was unprocessed and therefore was exempt under Notifications No.5/99 and 6/2000. In the ultimate analysis the Commissioner observed thus: "Thus, from the above discussion it is proved that the noticee has supplied knitted pile fabrics as well as knitted hosiery fabrics to the buyers sold by rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel appearing for the assessee, while supporting the impugned order of the Tribunal, urged that Chapter Note 4 of Chapter 60 of the Tariff Act refers only to those processes which result in irreversible or lasting change in the character of the fabric and, therefore, since the processes of shearing and back-coating did not bring about any change in the grey fabric, the said processes do not fall within the ambit of the said Chapter so as to attract Excise duty. To buttress the argument that the processes carried out by the assessee, namely shearing, back coating etc. are integral processes for the manufacture of knitted pile fabric and did not amount to manufacture of "processed fabric" as contemplated under Chapter Note 4 and, therefore, the assessee was entitled to claim exemption under Notification No.06/2000-CE, learned counsel relied on the decisions of the Tribunal in Maharashtra Fur Fabrics Ltd. vs. Collector of Central Excise, Bombay 1994 (71) E.L.T. 857 (Tri.-Del.) and Versatile Enterprises Pvt. Ltd. vs. Collector of Central Excise, Meerut 2001 (130) E.L.T. 770 (Tri.-Del.). 10. It was strenuously contended that so far as the process of shearing was concerned, the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 and/or (ii) whether the processes in question introduce such a change in the nature of the fabric that it ceases to be a grey fabric? 13. The relevant portion of Chapter 60 of the Tariff Act along with the notes reads as follows: "CHAPTER 60 KNITTED OR CROCHETED FABRICS Notes:- 1. This Chapter does not cover: (a) crochet lace of heading No. 58.04; (b) labels, badges or similar articles, knitted or crocheted, of heading No.58.07; or (c) knitted or crocheted fabrics, impregnated, coated, covered or laminated of Chapter 59. However, knitted or crocheted pile fabrics, impregnated, coated, covered or laminated, remain classified in heading No.60.01 2. This Chapter also includes fabrics made of metal thread and of a kind used in apparel, as furnishing fabrics or for similar purposes. 3. Throughout this Schedule, any reference to "knitted" goods includes a reference to stitch-bonded goods in which the chain stitches are formed of textile yarn. 4. In relation to products referred to in this Chapter, bleaching, mercerising, dyeing, printing, water- proofing, shrink-proofing, tentering, heat-setting, crease-resistant, organdie processing or any other process or any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing brings about any permanent or lasting change in the knitted pile fabric manufactured by the assessee by carding and knitting. In this regard, it would be useful to advert to the observations made by this Court in Commissioner of Central Excise, Hyderabad-I vs. Charminar Non-Wovens Limited, (2009) 10 SCC 770 wherein it was held that:- "Such concurrent findings by the lower authorities are interfered with by this Court in exercise of its jurisdiction under Section 35-L of the Central Excises and Salt Act, 1944 only when such findings are patently perverse or are based on manifest misreading of any legal provision. Here none of these situations is present. Reference in this connection may be made to the decision of Sidharath Pharmaceuticals v. CCE (2009) 16 SCC 561. In that judgment, the learned Judges of this Court held that with the concurrent finding of facts reached by the lower authorities in classification on the basis of evidence and on analysis of relevant legal provision interference is not called for by this Court in exercise of its power under Section 35-L of the Central Excise Act, 1944." 15. In the declaration submitted by the assessee, the said processes are desc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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