9911796707
TMI Blog2005 (8) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... t levied on these items and why penalty be not imposed. The Appellants claimed that under the abovementioned Notification these items bore a "Nil" rate of duty and that they were therefore not liable to pay duty. Their case was not accepted on the ground that in the process of manufacturing printed bed sheets, bed covers and pillow cases they mixed colour with the help of colour mixing machine which was operated with the aid of power. The Appellants were therefore called upon to pay duty. Penalty was also imposed on them. The Appeal of the Appellants has been dismissed by the CEGAT by the impugned Judgment. 3.Mr. Bagaria points out that the expression "made up" has been statutorily defined in Note 5 of Section XI as under : For the purposes of this Section, 'made"5. up' means :- (a) Cut otherwise than into squares or rectangles; (b) Produced in the finished state, ready for use (or merely needing separation by cutting dividing threads) without sewing or other working (for example certain dusters, towels, table cloths, scar squares, blankets); (c) Hemmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extile article", i.e., the cotton/printed fabric. He submitted that the benefit of this Notification cannot be denied on the ground that in the process of manufacture of cotton/printed fabrics power had been used. 6.Mr. Bagaria relied on a number of decisions, of CEGAT, involving identical facts, wherein it has been held that the benefit of such a Notification can not be denied. 7.In the case of Commissioner of Central Excise, Indore v. Dhvani Terefabs (Exports) Pvt. Ltd. reported in 2001 (132) E.L.T. 604 the Assessee was manufacturing towels from knitted pile fabrics which fell under Tariff Item 60.01. The Assessee received duty paid processed fabric in his factory, cut those fabrics to size and hemmed the edges with sewing machine. The Department felt that the last activity amounted to manufacture and demanded duty on that. The Appellants claimed benefit of Notification 65/87 which was denied to them on the ground that the activity of knitting the fabrics was carried on pile knitting machine in which power was used. CEGAT held that the knitting activity was for manufacture of knitted fabrics on which duty was paid and that the terry towels were manufactured by merely hemming an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Bagaria submitted that the impugned Judgment requires to be set aside. 12.On the other hand, Mr. Parasaran submitted that the Appellants carry on one continuous process of manufacture. He submitted that for the purposes of manufacture of "made-up textile articles" the Appellants purchase PVC sheets in rolls, cut them into small rectangular shape and print the same. He pointed out that in the process of printing they mixed colour with the aid of power. He pointed out that the Appellants then stitched and folded the printed sheets and manufactured the bed sheets, bed covers and pillow cases. He submitted that the process being, one continuous process, it could not be said that the bed sheets, bed covers and pillow cases were not made with the aid of power. He submitted that this Court has, in a number of decisions, held that the term "manufacture" would include all stages and all processes which are necessary for manufacturing the final product. 13.In support of his submission, he relied upon the case of Union of India v. Delhi Cloth & General Mills reported in [1963 SUPP. 1 SCR 586]. In this case, the Assessee was manufacturing Vanaspati. At an intermediate stage oil, which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d cement and steel, and coal were deleted. The question before the Court was whether these materials could be said to be intended for use in the manufacture of or processing of goods for sale. The Court was thus required to consider what was meant by "manufacture of or processing of". While considering this question this Court held that the expression "in the manufacture" would normally encompass the entire process carried on for converting raw material into goods. It was held that if a process or activity is so integrally connected to the ultimate production of goods so that but for that process manufacture or processing of goods is impossible or commercially inexpedient then the goods required in that process would be covered by the expression "in the manufacture of". It was held that it was not necessary that the words "in the manufacture of" would only refer to ingredients or commodities used in the actual manufacture. It was held that the words "in the manufacture" do not refer only to ingredients which are directly and actually needed for making the goods. 15.Mr. Parasaran also relied upon the case of Ujagar Prints & Ors. v. Union of India & Ors. reported in [1989 (3) SCC 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld also be a process in or in relation to manufacture to attract the relevant clause in the exemption notification. In our view, the word 'process' in the context in which it appears in the aforesaid notification includes an operation or activity in relation to manufacture. ……………………………………………………………………………………... We are, therefore, of the view that if26. any operation in the course of manufacture is so integrally connected with the further operations which result in the emergence of manufactured goods and such operation is carried on with the aid of power, the process in or in relation to the manufacture must be deemed to be one carried on with the aid of power. In this view of the matter, we are unable to accept the contention that since the pumping of the brine into the salt pans or the lifting of coke and limestone with the aid of power does not bring about any change in the raw material, the case is not taken out of the notification. The exemption under the notification is not available in these cases." 17.Reliance was further placed upon the case of Collector of Central Excise v. Kamal Chemical Industries reported in 1992 (61) E.L.T. 682. In this case also, power has been used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of". It has been held that it was not necessary that the words "manufacture" would only refer to the stage at which ingredients or commodities are used in the actual manufacture of the final product. It has been held that the word "manufacture" does not refer only to the using of ingredients which are directly and actually needed for making the goods. These authorities are binding on us. It is also settled law that to avail of an exemption the party has to strictly comply with the exemption Notification. Therefore the wording of the Notification becomes relevant. The Notification grants exemption to "made-up textile articles" only "if made without the aid of power". These words mean the same thing as "in the manufacture of which no power is used". We are unable to accept submission that the word "made" only refers to stage of manufacture from cotton fabrics to printed bed sheets, bed covers and pillow cases. The Chapter Notes relied upon by Mr. Bagaria only specify that the activities mentioned therein amount to manufacture (made up). The Chapter notes have been put in to eliminate arguments that those activities do not amount to manufacture. They do not detract or make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h (2 tables) and 13 metres (other two tables). The length and breadth of our sheet is the same as that of a Bombay Dyeing sheet, is approximately 89 x 100 cm. The pillow covers are made after cutting the same from the already printed sheets, which are naturally dried by just hanging in the open air. The cutting of the sheets is done manually. The screens are made in the following manner : The screen which is coated with a photo4. emulsion and is exposed to tube light, with the aid of power i.e. generator. At times when there is no power, the screens are exposed to sun light. Shri Ganga Ram Colour Master of the5. appellants has stated that the unit was receiving plain cloth in thans and thereafter the same was cut and placed on tables for printing; the number of screens was equal to the number of colours; that towels were being received in sets in different sizes i.e. Medium, large etc. and thereafter the same was printed just like sheets; that then the same was dried up in the open air; that after the cloth got dried the same was steamed with the aid of steam generated out of water with the help of coal or gas; that thereafter stitching, pressing/ironing and packing is done; that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
