Calendering of fabrics and damping do not amount to manufacture; excise demand also failed on limitation.

Calendering of fabrics with plain rollers, along with the preparatory damping process, was treated as a process that did not bring into existence a commercially distinct product and therefore did not amount to manufacture for central excise purposes. The duty demand also failed on limitation because the show cause notice did not allege suppression of facts or wilful misstatement, while the process had been disclosed in the approved classification list and was said to have been observed by departmental officers. On that basis, the extended limitation period was not available, and the demand was barred.

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Issues: (i) Whether calendering of fabrics with plain rollers and the allied process of damping amounted to manufacture so as to attract central excise duty. (ii) Whether the duty demand was barred by limitation.

Issue (i): Whether calendering of fabrics with plain rollers and the allied process of damping amounted to manufacture so as to attract central excise duty.

Analysis: The Tribunal applied the settled principle that a process amounts to manufacture only if it brings into existence a commercially different product. Calendering with plain rollers was held not to change the essential identity of the fabric, and damping was treated as only a preparatory wetting process for calendering, without any change in name, character, or use of the fabric.

Conclusion: Calendering with plain rollers and the allied damping process did not amount to manufacture and no excise duty was leviable on that basis.

Issue (ii): Whether the duty demand was barred by limitation.

Analysis: The show cause notice contained no allegation of suppression of facts or wilful misstatement. The process had been disclosed in the classification list, which had been approved, and the departmental officers were stated to have visited the factory and seen the operations. In these circumstances, the longer limitation period was held inapplicable.

Conclusion: The demand was barred by limitation.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Calendering of fabric with plain rollers, including the preparatory damping process, does not amount to manufacture unless it brings about a commercially distinct product, and in the absence of suppression or wilful misstatement, the extended period of limitation cannot be invoked.

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