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TMI Blog2005 (8) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... is impossible to manufacture printed bed sheets, bed covers and pillow cases. In such cases it is irrelevant that at an intermediate stage some other excisable commodity comes into existence. The cotton fabrics are manufactured in the process of manufacture of printed bed sheets, bed covers and pillow cases. We thus see no infirmity in the impugned Judgment when it holds that the benefit of the Notification is not available. Against assessee. - 3536 of 2000 - - - Dated:- 24-8-2005 - S.N. Variava and Tarun Chatterjee, JJ. [Judgment per : S.N. Variava, J.]. - This Appeal is against the Judgment dated 27th December, 1999 by the Customs, Excise and Gold (Control) Appellate Tribunal (for short CEGAT), New Delhi. 2.Briefly stated the facts are as follows : The Appellants are manufacturers, amongst others, of items like bed sheets, bed covers and pillow cases. In this Appeal, we are concerned with the question as to whether the Appellants are entitled to the benefit of Notification No. 65/87-C.E., dated 1st March, 1987 in respect of bed sheets, bed covers and pillow cases. These items fall under Tariff Item 6301 which consists of "made-up textile articles". Under the Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for manufacturing those items. In support of this he relied upon Chapter Note 2 of Chapter 52 which reads as follows : In relation to products of heading Nos."2. 52.06 to 52.12, bleaching mercerizing, dyeing, printing, water-proofing, shrink-proofing, organdie processing or any other process or any one or more of these processes shall amount to 'manufacture'." 5.He submitted that the process of printing of fabrics was statutorily defined as amounting to "manufacture". He submitted that the fact that even those items have a "Nil" rate of duty (under other Notifications) did not detract from fact that the process of printing was for a different excisable commodity. He submitted that after the cotton/printed fabrics are manufactured the "made-up textile articles" are then manufactured without the aid of power from those cotton/printed fabrics. He submitted that the Notification exempts "made-up textile articles" from payment of duty "if made without the aid of power". He submits that the word "made" refers to the "made-up textiles articles". He submits that for the purposes of this Notification it is not open to go beyond the stage of inputs which go into the manufacture of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise, Calcutta-I reported in 2000 (125) E.L.T. 646 CEGAT, Calcutta has held that the benefit of the exemption would not be lost on generator sets which are manufactured without the aid of power merely because power is used in the manufacture of its inputs i.e. alternators. It is held that the manufacture of inputs would be a separate individual activity and duty was paid on the inputs. 11.Relying on the abovementioned authorities, Mr. Bagaria submitted that in the present case also the colouring was done not for the purposes of manufacture of "made up textile articles" but for manufacture of cotton fabrics which was a separate excisable commodity. He submitted that the mere fact that that commodity was also exempted from duty made no difference and thus the benefit of the Notification was not lost. He submitted that the purpose of the Notification was to give benefit of exemption and this purpose must not be defeated by interpreting the Notification in a manner not borne out by a plain reading of the Notification. In support of this submission he relied upon the case of Collector of Central Excise Ors. v. Himalayan Cooperative Milk Product Union Ltd. Ors. reported in [200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saran submitted that it has been held by a Constitution Bench of this Court that if power is used for any of the numerous processes then it would be manufacture with the aid of power and that it would not be open to argue that there is no manufacture as understood in its ordinary sense. 14.Mr. Parasaran also relied upon a three Judge Bench decision of this Court in the case of J.K. Cotton Spinning Weaving Mills v. Sales Tax Officer, Kanpur Anr. reported in [1965 (1) SCR 900]. In this case, the Assessee was carrying on the business of manufacturing textile goods, tiles and other commodities. It applied for registration under Section 7 of the Central Sales Tax Act and requested that certain goods be specified in the certificate of Registration for the purposes of getting the benefit under Section 8(1) of the Act. By virtue of Section 8(3)(b) read with Rule 13 this benefit was only available in respect of goods which were "intended for use in the manufacture of or processing of goods for sale". Initially, the Assessee was granted the certificate in respect of goods claimed by them. However, subsequently, certain goods like drawing material, photographic material, building materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on salt, brine was pumped into salt pans by using diesel pump and then lifted to a platform by the aid of power. The question was whether the pumping and lifting with the aid of power constituted processes in or in relation to manufacture. The other assessee was manufacturing lime from coke and limestone. The raw materials were lifted to a platform at the head of kiln with the aid of power. The question was whether the activity of lifting with the aid of power constituted process in or in relation to manufacture. This Court considered the earlier authorities of this Court, set out hereinabove, and inter alia held as follows : A process is a manufacturing process"20. when it brings out a complete transformation for the whole components so as to produce a commercially different article or a commodity. But, that process itself may consist of several processes which may or may not bring about any change at every intermediate stage. But the activities or the operations may be so integrally connected that the final result is the production of a commercially different article. Therefore, any activity or operation which is the essential requirement and is so related to the further operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions. It must be mentioned that in the beginning we were impressed by Mr. Bagaria's submissions. However we find that the authorities of this Court, relied upon by Mr. Parasaran, hold that "manufacture" in Sec. 2(f) of the Central Excise Act includes any process incidental or ancillary to the completion of a manufactured product. It has been held that this puts it beyond any possibility of controversy that if power is used for any of the numerous processes that are required to turn the raw material into the finished article then the manufacture will be with the use of power. It has been held that if power is used at any stage then an argument that power is not used in the whole process of manufacture, using the word in its ordinary sense, will not be available. It has been held that the expression "in the manufacture" would normally encompass the entire process carried on for converting raw material into goods. It has been 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hapar in his statement recorded on 4-6-93 : "Sheeting : The sheets are put on the table, after which the screen printing is done manually as per the colour and design being printed. A separate screen is used for every colour. These screens are designed and made in our premises. After the design is printed, the sheeting is removed from the table into a bin. On accumulation of a certain quantity (of sheets) the same is put up for steaming. This steaming is done by heating the water either by coal or gas. The colours are mixed in paste and thinned3. down by water so that each colour can be printed through the each of the screen. If the quantity is small, we mix the colour by hand, otherwise with larger quantities of 25 kgs. is mixed with a mixer to get the proper mixing. The mixer is operated with the aid of power. Since there is no electricity in our premises, we operate two generators off and on to facilitate our functioning. The capacity of our generators is 6.5 HP and 25 KVA. In a single shift of 8 hours, it is operated for maximum of 4 hours per day. The average consumption of diesel is approximately 1.5 to 2.5 litres per hour. We have four tables for printing purposes, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat this is the manufacturing process. It must be noted that initially it had been contended that stitching had been done on job work basis. This was found to be factually incorrect and before us this plea has not even been urged. From the above set out process it is clear that the activity of manufacturing printed bed sheets, bed covers and pillow cases starts with the screen printing and colouring. Without this activity it would not be possible to make printed bed sheets, bed covers and pillow cases. The activity of printing and colouring is much more integrally connected to the manufacture of printed bedsheets, bed covers and pillow cases than say the activity of pumping brine into salt pans for manufacture of salt or the activity of lifting raw material to the platform at the head of the kiln for manufacture of lime. Without the printing and colouring it is impossible to manufacture printed bed sheets, bed covers and pillow cases. In such cases it is irrelevant that at an intermediate stage some other excisable commodity comes into existence. The cotton fabrics are manufactured in the process of manufacture of printed bed sheets, bed covers and pillow cases. We thus see no infi ..... 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