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TMI Blog2002 (11) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... Phosphor Bronze Wire Cloth, Stainless Steel Wire Cloth and Synthetic Wire Cloth for use in Foundrinier paper making machine falling under Heading 59.09 of the Schedule to the Central Excise Tariff Act; that in September, 1992 a dispute was raised by the Department that in the process of manufacture of "Dandy Covers", etc., fabrics falling under Heading 54.09 of the Tariff was being manufactured and captively consumed which had culminated in the impugned Order demanding duty and penalty. The learned Senior Counsel submitted that Shri Samir Sarangi, General Manager works, had given process of manufacture in his Affidavit dated 15-6-1992 as under : "The polyester yarns are wrapped on the weaving loom on the wrap beam; the wrap yarns are take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mediate goods would not be subjected to duty unless they satisfy the test of marketability. Reliance has also been placed on the decision in the case of C.C.E. v. Ambalal Sarabhai Enterprises [1989 (43) E.L.T. 214 (S.C.)]. He also submitted that the burden of proof of marketability is on the Department; that the said onus of proving marketability has not been discharged by the Department; that the Commissioner has merely given his findings in the impugned order that the goods finds a specific mention in the Tariff and has a clear distinct identity as fabrics and as has been used for further manufacture, the goods is capable of being sold in the market. The learned Senior Counsel contended that it is well settled by the decisions of Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods which has been captively consumed by the Appellants; that if the Additional duty has been demanded under Additional Duties of Excise (Textiles and Textiles Articles) Act, no duty is demandable as the duty was leviable @ 15% of the Basic Excise duty which was nil during the first three financial years, 1987-88 to 1989-90; that moreover duty has been worked out on the basis of the value of the finished goods; that no penalty under Rule 173Q of the Central Excise Rules can be imposed as held by the Delhi High Court in Pioneer Silk Mills v. Union of India - 1995 (80) E.L.T. 507 (Del.) and Begani Dyeing Mills P. Ltd. v. CCE, Surat - 2001 (136) E.L.T. 508 (T). 6.Countering the arguments, Shri A.K. Mondal, learned D.R., reiterated the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes into existence at the intermediate stage and if so, what is the correct classification of such intermediate fabrics. From the records and the affidavit submitted by them shows that polyester yarn is used as input on the weaving loom process (a). The greig fabric emerges at process (f) after weaving and such fabrics were subjected to heat treatment at process (g) where as the finished fabric (Foundrinier Synthetic cloth or Dandy cover/roll cover as it may be) comes into existence only at process (j) after seaming and further stretching operation. Therefore, the emergence of intermediate fabrics as at process (f) and (g) is a fact. As per Encyclopedia of Textiles (2nd edition) of American Fabrics Magazine P 531 a "Greig Fabric" is a gre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fabrics must be subjected to two or more specified processes. This is also apparent from Note 3 to Chapter 54 of the Tariff which reads as under :- "In relation to products of heading Nos. 54.09, 54.10, 54.11 and 54.12, bleaching, dyeing, printing, shrink-proofing, tentering, heat setting, crease- resistant processing or any other process or any one or more of these processes shall amount to 'manufacture'." We thus agree with the findings of the Adjudicating Authority that the fabrics which emerges is classifiable under Heading 54.09 of the Tariff. 8.Now, we come to the question of marketability of the impugned product. It has been held by the Supreme Court in U.O.I. v. Delhi Cloth General Mills, 1977 (1) E.L.T. (J199) (S.C.) that "T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r proviso to Section 11A(1) of the Central Excise Act is invocable as the fact of manufacture of the impugned products was not disclosed to the Department. It was the duty of each and every assessee to file a classification list under Rule 173B of the Central Excise Rules, 1944 at the material time declaring the goods manufactured by them. As the said fact was suppressed from the Department and goods were cleared without payment of duty, demand of Central Excise duty can be made for extended period in the present case. 9.We, however, agree with the learned Senior Counsel that no penalty can be imposed in view of the decision of the Delhi High Court in Pioneer Silk Mills supra. We, therefore, set aside the penalty. The appellants have clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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