Processed cotton fabrics were classifiable at the processed stage, and provisional excise approval could be revised through timely notice.

Processed cotton fabrics that acquired a non-cellulosic fibre content above 30% after scouring, bleaching, dyeing and printing were classified for excise purposes by reference to the processed stage, not the grey stage, because retrospective amendments treated processing as manufacture and created separate treatment for processed fabrics. The textile stamping requirement did not control tariff classification. An expressly provisional classification approval, subject to test results and further orders, could be reopened by the Assistant Collector through timely show-cause notices, and the resulting differential duty demand was within jurisdiction and limitation.

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Issues: (i) Whether processed cotton fabrics, after scouring, bleaching, dyeing and printing, were correctly classifiable under Item 19-I(1A) of the Central Excise Tariff Schedule when their non-cellulosic fibre content exceeded 30% at the processed stage; (ii) Whether the Assistant Collector was entitled to revise the approved classification and demand differential duty by show-cause notices issued within limitation.

Issue (i): Whether processed cotton fabrics, after scouring, bleaching, dyeing and printing, were correctly classifiable under Item 19-I(1A) of the Central Excise Tariff Schedule when their non-cellulosic fibre content exceeded 30% at the processed stage.

Analysis: The fabric was found to have a lower non-cellulosic fibre content at the grey stage, but after processing the percentage rose above 30% because part of the cotton content was lost in processing. The legal position on manufacture and tariff classification was altered by the retrospective amendments introduced by the Central Excises and Salt and Additional Duties of Excise (Amendment) Act, 1980, which treated processing as manufacture and created separate treatment for processed fabrics. On that basis, the relevant classification for levy was the processed stage, not the grey stage. The argument based on textile stamping requirements could not control excise classification.

Conclusion: Yes. The processed fabrics were correctly classified under Item 19-I(1A), and the appellants were not entitled to insist on grey-stage classification for duty purposes.

Issue (ii): Whether the Assistant Collector was entitled to revise the approved classification and demand differential duty by show-cause notices issued within limitation.

Analysis: The classification list had been approved only provisionally, with a clear endorsement that samples were drawn for test and the approval operated until further orders. In such a situation, the approval was not final and could be revisited when test results justified reclassification. The notices were issued within the prescribed time under the relevant limitation rule, and the case did not involve an impermissible review of a final quasi-judicial assessment order. The contention that only the Board could intervene was rejected.

Conclusion: Yes. The Assistant Collector had jurisdiction to re-open the matter and confirm the demand through the show-cause proceedings.

Final Conclusion: The appeal failed because the processed goods were liable to be classified and assessed on the basis of their processed condition, and the reclassification and demand were held to be within jurisdiction and within time.

Ratio Decidendi: Where processing results in a tariff-relevant change in fibre composition and the initial approval is expressly provisional, excise classification and duty liability may be determined at the processed stage, and such approval may be revised through timely statutory proceedings.

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