Manufacture under excise tariff notes not made out where fabric processing alone did not create a new finished product.

Processing knitted pile fabric by washing, dyeing, bleaching, hydro-extraction, tumble dyeing and drying did not itself bring into existence a new excisable product. The fabric was only partially processed and towels emerged only after later cutting, sewing and hemming by another processor, so the assessee's activity was not manufacture of towels or production of an article in finished state. On that basis, neither Section Note 5(f) nor Section Note 5(b) of Section XI of the Central Excise Tariff Act, 1985 applied, and the revenue demand failed. The Tribunal's order was upheld and the assessee succeeded on merits.

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Issues: Whether the job work of washing, dyeing, bleaching, hydro-extraction, tumble dyeing and drying of knitted pile fabric resulted in manufacture of a new excisable product, and whether the goods fell within Section Note 5(f) or Section Note 5(b) of Section XI of the Central Excise Tariff Act, 1985.

Analysis: The process undertaken by the assessee did not bring into existence any new item or finished product. The fabric was returned after partial processing and only later, after further cutting, sewing and hemming by another processor, did towels emerge. In that situation, neither Section Note 5(f) nor Section Note 5(b) of Section XI was attracted, because the assessee's activity by itself did not amount to manufacture of towels or to production of an article in the finished state.

Conclusion: The demand was unsustainable and the assessee succeeded on merits.

Final Conclusion: The Tribunal's order was upheld and the revenue appeals failed, as the assessee's processing activity did not amount to manufacture of towels under the tariff notes invoked.

Ratio Decidendi: Processing of fabric that does not itself result in emergence of a new product does not constitute manufacture for excise classification purposes under the relevant tariff notes.

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