Temporary stiffness in cotton fabric padding does not amount to manufacture, preserving exemption despite use of additional chemicals.

Padding cotton fabrics with starch, polyvinyl acetate and related chemicals did not amount to manufacture because the process only imparted temporary stiffness and did not create a new product with a distinct name, character or use. Exemption for padded cotton fabrics could not be denied merely because chemicals other than starch or fatty materials were also used in the padding process. On that reasoning, excise duty was not attracted and the impugned order was set aside.

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Issues: Whether cotton fabrics subjected to padding, in which starch and fatty materials were used along with certain other chemicals, were eligible for exemption under the notification, and whether the process of padding amounted to manufacture attracting excise duty.

Analysis: The exemption covered cotton fabrics subjected to padding, namely applying starch or fatty materials on one or both sides of the fabrics. The factual position was that the fabrics were padded with starch and polyvinyl acetate along with other chemicals such as soap stone powder, urea formaldehyde, copper sulphate, blue acid violet and tinopal. The Tribunal relied on its earlier decisions holding that padding only gives temporary stiffness which disappears after washing and does not bring into existence a new product with a distinct name, character or use. Once the process itself does not amount to manufacture, excise duty is not attracted, and denial of exemption on the ground that other chemicals were also used was unsustainable.

Conclusion: The process of padding did not amount to manufacture and the exemption could not be denied merely because additional chemicals were used. The impugned order was set aside and the appeals were allowed.

Ratio Decidendi: A process that merely imparts temporary stiffness to fabric and does not create a new and distinct product is not manufacture, and exemption for padded cotton fabrics cannot be denied solely because chemicals other than starch or fatty materials were also used in padding.

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