2015 (10) TMI 1363 - AT - Central Excise

Appellate Tribunal rules Chemiking and Spotting activities not 'manufacture' under Central Excise Act

The Appellate Tribunal ruled in favor of the Appellant, determining that the processes of Chemiking and Spotting undertaken by them did not amount to ... Manufacturing activity or not - whether the processes of Chemiking and Spotting undertaken by the Appellant amounts to manufacture under Section 2(f) of the Central Excise Act, 1944 or not - Held that:- Appellant is only undertaking the process of Chemiking and Spotting which is akin to the process of washing and cannot be considered to have brought a new marketable product into existence which is brought and sold in the market - In the case of CCE, Coimbatore Vs K.G Denim Ltd (2005 (7) TMI 650 - CESTAT BANGALORE) also, it was held that every process undertaken on the fabrics will not go into the category of 'any other process' as mentioned in Note 2 of the Chapter 52 of the Central Excise Tariff Act, 1985. - processes of Chemiking and Sporting undertaken by the Appellant does not amount to manufacture - Decided in favour of assessee. Issues:Whether the processes of Chemiking and Spotting undertaken by the Appellant amount to manufacture under Section 2(f) of the Central Excise Act, 1944.Analysis:Issue 1: Processes of Chemiking and Spotting as Manufacturing ActivitiesThe Appellant argued that the processes of Chemiking and Spotting undertaken by them do not amount to manufacture under Section 2(f) of the Central Excise Act, 1944. The Appellant contended that their activities only involved washing, which does not result in the creation of a distinct marketable commodity. The Adjudicating Authority, however, found that the Appellant was engaged in the complete process of dyeing man-made fabrics, not just simple washing. The Authority referred to relevant case laws and noted that various processes, including Chemiking and Spotting, could amount to 'manufacture' as per the Central Excise Tariff Act. The Authority concluded that the Appellant's processes constituted a part of the overall dyeing activity, and therefore, should be viewed as a whole to determine if it amounts to manufacture.Issue 2: Adjudicating Authority's DecisionThe Adjudicating Authority observed that the Appellant's processes of Chemiking and Spotting involved applying chemicals, soap, and detergent to the fabrics received from another manufacturer. After these processes, the fabrics were returned for further dyeing. The Authority emphasized that washing was an essential step before dyeing and that the entire activity of dyeing, including washing, should be considered as a single manufacturing process. The Authority relied on precedents to support the view that incidental processes like Chemiking and Spotting could be part of the manufacturing activity. Consequently, the Authority held that the Appellant's processes amounted to the manufacture of man-made fabrics.Issue 3: Appellate Tribunal's DecisionUpon review, the Appellate Tribunal analyzed the arguments and findings of the Adjudicating Authority. The Tribunal referred to relevant judgments that clarified the scope of manufacturing activities and noted that not every process on fabrics would qualify as 'manufacture.' After considering the facts and legal precedents, the Tribunal concluded that the processes of Chemiking and Spotting undertaken by the Appellant did not amount to manufacture under the Central Excise Act. The Tribunal highlighted that the Appellant's activities were akin to washing and did not result in the creation of a new marketable product. Therefore, the Tribunal allowed the appeal filed by the Appellant, ruling that their processes were not classified as manufacturing activities.In conclusion, the Appellate Tribunal determined that the processes of Chemiking and Spotting undertaken by the Appellant did not meet the criteria for 'manufacture' as defined in the Central Excise Act, based on the specific nature of the activities and legal interpretations provided by relevant case laws.