9911796707
TMI Blog2001 (1) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... e product, namely knitted fabrics (processed) emerged at the intermediate stage which was classifiable under Tariff Heading 6001.92 of the CETA; and leviable to basic excise duty at the rate of 12% and additional excise duty at the rate of 8% under Additional Duties of Excise (Goods of Special Importance) Act, 1957. The knitted fabric (processed) could not be, therefore, removed in terms of explanation under Rules 9 and 49 of the Central Excise Rules for captive consumption for the manufacture of the final product, namely knitted blankets in the factory premises without paying the appropriate excise duty. But the appellants neither disclosed/declared about the said intermediate goods in the classification lists, as required under Rule 173B of the Rules nor entered the same in the statutory record. No doubt, in terms of Notification No. 67/95-C.E., dated 16-3-1995 the said intermediate goods were exempt from basic excise duty leviable under the Central Excise Tariff Act subject to the other conditions specified therein but there was no exemption from payment of additional excise duty leviable under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intermediate product (knitted fabric processed) used in the manufacture of blankets which were exported by the appellants. He only confirmed the additional excise duty of Rs. 5,99,336/- on the intermediate product captively consumed in the manufacture of the blankets cleared for home consumption. He also imposed penalty of Rs. 1,00,000/- on the appellants. He also demanded interest at the rate of 20% on the delayed payment of duty which was later on raised to 24% through corrigendum dated 7-7-2000 issued on 10-7-2000. This order-in-original has been challenged by the appellants in the present appeal being dissatisfied with the same. 6. The learned counsel for the appellants has raised two-fold contentions to assail the validity of the impugned order of the Commissioner. Firstly that the appellants are engaged only in the manufacture of knitted acrylic blankets falling under sub-heading 6301.90 of the CETA on which they were paying the duty at the time of clearances and not knitted fabric (processed) and as such no additional excise duty on the later could be claimed from them. Secondly, keeping in view the machinery used and the process adopted by the appellants for the manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting machine are obtained. The process is repeated on the length of 2.5 metres. (4.5) Thereafter, the continuous length of the blankets are taken to a dryer which has the effect of drawing the blankets. (4.6) The dried blankets then undergo the process of brushing and raising which provides a soft underside to the blanket. Brushing machine bursh and raise the fibre from underside of the blankets by plucking out the fibre from the yarn. (4.7) That in the next step, the blankets are sheared and polished on a sucker-muller, a German Machine. Uneven pile yarn from the surface of the blankets are cut and the surface is polished, so as to give the blanket a finished appearance. The finished blankets so produced are of 8-9 mm in thickness and in continuous length of 80 metres. (4.8) That from the continuous length of 80 metres of blankets, each blanket of 2.4 metres in length is manually cut, hemmed and packed and thereafter the blankets are ready for sale. (4.9) That it will not be out of place to mention over here that the technology used in the double raschel machine is as such that the production of continuous length of blankets (80 metres) is essential. Accordingly, printi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , also need continuous length; which in the present case is 80 m and the width is about 2.25 m. This sequence of machinery 3-5 helps in producing finished blankets of 8-9 mm thickness and about 80 m continuous length. The organisation has manual cutting, hemming and packing operations to market blankets in a presentable form to meet the customer s requirement. The standard blanket has a width of 2.25 m and a length of 2.4 m; thickness of 15 mm. COMMENTS : It is clear that the sequence of machinery at the above organisation as seen by me and described above is for making exclusively Blankets. The attached pamphlets also clearly confirm my findings. The firm is producing high quality Blankets. Based on the coarse Gauge of the machine (12-14), it is unlikely to produce pile fabrics (other than unfinished blankets) as the thickness of the face to face material is 22 mm; a normal fabric has a thickness of 1-4 mm max. 11. There is nothing on the record to suggest if the Excise Department had ever questioned the correctness of the process of manufacture of the blankets and the machinery used for that purpose by the appellants as detailed above. The department also did not get the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacture or production of the goods but the entire concept of bringing new commodity, etc., is linked with the marketability. An article does not become goods in the common parlance unless production or manufacture unless a new or different commodity is brought out unless the same is bought out or sold. This very view had been reiterated by the Apex Court in South Bihar Sugar Mills Ltd. Another, etc. v. Union of India and Another, etc. - 1978 (2) E.L.T. (J 336) (S.C.). In that case also the Apex Court has ruled as under :- The Act charges on the manufacture of goods the word manufacture implies a change but every change in the raw material is not a manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name, character or use. To become goods it must be something which can come to the market to be bought and sold and is known to the market. Similarly in Bhor Industries v. CCE - 1989 (40) E.L.T. 280 (S.C.) the Apex Court has explained that :- For an article to be goods these must be known in the market as such or these must be article of being sold in the market as goods although actual sale in the mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material having transient character and no independent identity of its own and not shown by the Revenue on whom the initial burden rests, to be marketable, cannot be treated as goods just because it could be used in further manufacture of an end-product. In this context reference may be made to the ratio of law to that effect laid down by the High Court in Indofil Chemicals Ltd. v. Union of India - 1994 (73) E.L.T. 9 (Del.). The Apex Court also in J.K. Spinning Weaving Mills v. U.O.I. - 1987 (32) E.L.T. 234 (S.C.) has observed that although manufacture is possible even at the intermediate stage but that product must be identifiable which could be sold in the market and it is not a commodity which requires further process for making the same marketable. 16. In the light of the discussion made above, by keeping in view the facts and circumstances of the case and the material brought on the record, in our view no intermediate product known or understood in the trade as knitted fabric (processed) falling under Chapter 60 of the CETA having marketability as such was produced by the appellants while manufacturing the knitted acrylic blankets which were classifiable under Chapter 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
