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Issues: (i) whether tufted fabric manufactured by the appellant was furnishing fabric and liable to central excise duty; (ii) whether recovery was barred by limitation.
Issue (i): whether tufted fabric manufactured by the appellant was furnishing fabric and liable to central excise duty.
Analysis: The sample of the goods was examined and it was found that tufted fabric was not merely embroidered fabric. The authorities had concurrently held that tufting was a distinct process of manufacture and that the product fell within furnishing fabric for the purpose of duty.
Conclusion: The issue was decided against the assessee and the goods were held liable to central excise duty as furnishing fabric.
Issue (ii): whether recovery was barred by limitation.
Analysis: The record did not show any bona fide belief on the part of the assessee that the goods were embroidered fabric and exempt. On the facts found, Rule 9(2) was held applicable and Rule 10 was held inapplicable.
Conclusion: The issue was decided against the assessee and recovery was held not barred by limitation.
Final Conclusion: The appeal failed, and the concurrent findings upholding duty liability and rejecting the plea of limitation were sustained.
Ratio Decidendi: Where the product manufactured is found on the evidence to answer the tariff description attracting duty, and the assessee lacks a bona fide basis for claiming exemption, recovery may proceed under the applicable excise rule and cannot be defeated on limitation grounds.
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