Loose stock in RG-I treated as fully manufactured goods, with duty payable at the pre-scheme rate.

Fabrics reflected as loose stock in RG-I were treated as fully manufactured goods because the prescribed register distinguished finished goods only in packed or loose form, and no evidence showed the stock was still grey or unprocessed. In textile processing, each stage of processing amounts to manufacture, so goods that have undergone such processing are not semi-finished merely because they remain unpacked. Duty was therefore payable at the pre-scheme rate on the loose stock, and the challenge failed.

---

---

Issues: Whether fabrics shown as loose stock in RG-I on the eve of introduction of the compounded levy scheme were to be treated as fully finished goods liable to duty at the pre-scheme rate, or as semi-finished goods not so liable.

Analysis: The prescribed RG-I proforma required finished goods to be shown in packed and loose form, and the loose category referred to fully finished goods. No evidence was produced to show that the stock recorded as loose consisted of grey fabric still awaiting processing. The entries in the register and the supporting statement could not be reconciled. In textile processing, each stage of processing amounts to manufacture, so fabric that has undergone such processes cannot be treated as semi-finished merely because it remains unpacked or in loose condition. Duty is payable on intermediate or manufactured goods arising in the course of production unless exempted.

Conclusion: The loose stock was correctly treated as fully manufactured goods chargeable to duty at the rate prevailing before the compounded levy scheme came into force, and the assessee's challenge failed.

---