2003 (1) TMI 490 - AT - Central Excise

Tribunal Upholds Exemption for Cotton Fabrics; Clarifies Duty Rates

The Tribunal rejected the Revenue's appeal and upheld the Commissioner (Appeals) finding that cotton fabrics processed by a specific company were eligible ... Textiles, Cotton fabrics, Processing of - Exemption Notification 41/95-C.E. Issues:1. Interpretation of Notification No. 41 of 1995-C.E. regarding exemption eligibility for cotton fabrics processed by a specific company.2. Determination of duty rates for cotton fabrics processed by independent processors on handlooms.Issue 1: Interpretation of Notification No. 41 of 1995-C.E.:The appeal by the Revenue challenges the Commissioner (Appeals) finding that cotton fabrics processed by a company were eligible for exemption under Notification No. 41 of 1995-C.E. The contention was that since the fabric processed was 100% cotton fabric woven on handloom, it did not qualify for exemption under the specific serial number. The argument was that the company was not eligible under the clause as it was not a registered handloom co-operative society or an approved organization as required by the Notification.Issue 2: Determination of Duty Rates for Cotton Fabrics Processed on Handlooms:The dispute revolved around the processing of 100% cotton fabrics by independent processors on handlooms. The Commissioner (Appeals) held that such fabrics attract duty rates of 5% or 10% based on the value per square meter. The Revenue argued that the term 'others' in the Notification excluded handloom fabrics and applied only to cotton fabrics produced on power looms. However, the Tribunal disagreed, stating that 'others' in the Notification did not contain any qualifying terms like 'other than handlooms,' and thus, covered all cotton fabrics not specified under the previous clause. Therefore, the Tribunal upheld the Commissioner's interpretation that 'others' under the Notification includes all cotton fabrics not covered by the specific entry for handloom fabrics.In conclusion, the Tribunal rejected the appeal by the Revenue, affirming the Commissioner (Appeals) finding that the cotton fabrics processed by the company were eligible for exemption under Notification No. 41 of 1995-C.E. The judgment clarified the interpretation of duty rates for cotton fabrics processed on handlooms, emphasizing that the term 'others' in the Notification encompasses all cotton fabrics not specified under the handloom clause.