Calendering not manufacturing process under Central Excises Act. Appellant eligible for duty exemption. Tribunal criticizes Adjudicating Authority.

JAPAN DYEING WORKS Versus COLLECTOR OF CENTRAL EXCISE

JAPAN DYEING WORKS Versus COLLECTOR OF CENTRAL EXCISE - 1992 (61) E.L.T. 289 (Tribunal) Issues Involved:
1. Whether the process of calendering with plain rollers amounts to manufacture u/s 2(f) of the Central Excises and Salt Act, 1944.
2. Admissibility of exemption from additional duty on man-made fabrics in terms of Notification No. 297/79-C.E., dated 24-11-1979.
3. Ownership and possession of the calendering machine during the relevant period.
4. Consideration of evidence and procedural fairness in the adjudication process.

Summary of Judgment:

Issue 1: Whether the process of calendering with plain rollers amounts to manufacture u/s 2(f) of the Central Excises and Salt Act, 1944.
The Tribunal examined whether calendering with plain rollers constitutes a manufacturing process. It referred to Section 2(f) of the Central Excises and Salt Act, 1944, which includes any process specified in the Section or Chapter Notes of the Central Excise Tariff Act, 1985, as amounting to manufacture. The Tribunal noted that calendering is not specifically included within the definition of manufacture. Supreme Court precedents, such as Mafatlal Fine Spinning & Mfg. Co. Ltd. v. Collector of Central Excise and Siddheswari Cotton Mills (Pvt.) Ltd. v. Union of India, were cited, which held that calendering does not amount to manufacture. The Tribunal concluded that calendering with plain rollers does not constitute a manufacturing process under the amended provisions and the Central Excise Tariff Act.

Issue 2: Admissibility of exemption from additional duty on man-made fabrics in terms of Notification No. 297/79-C.E., dated 24-11-1979.
The Tribunal examined Notification No. 297/79-C.E., which exempts man-made fabrics from additional duty if subjected to specified finishing processes. The notification stipulates that no such exemption applies if the fabrics are subjected to any other process within the same factory. The Tribunal held that since calendering with plain rollers is not considered a manufacturing process, the exemption under the notification is applicable. The Tribunal rejected the Department's argument that the notification should guide the interpretation of the term "manufacture."

Issue 3: Ownership and possession of the calendering machine during the relevant period.
The appellant contended that the calendering machine was owned by Mr. Kishan Chand B. Arora and not by the appellant's firm. The machine was installed in the adjacent premises and was under repair during the relevant period. The Tribunal found that the Department did not adequately consider the evidence provided by the appellant, such as repair bills and affidavits, which supported the claim that the appellant did not own or possess the calendering machine during the relevant period.

Issue 4: Consideration of evidence and procedural fairness in the adjudication process.
The Tribunal noted that the Adjudicating Authority did not properly consider the evidence presented by the appellant, nor did it allow cross-examination of independent witnesses. The Tribunal emphasized that the burden of proof lies with the Department to establish an offense. The Tribunal found that the Department failed to meet this burden, and the impugned order was not sustainable on merits.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, concluding that calendering with plain rollers does not amount to manufacture, and the appellant was eligible for exemption from additional duty under Notification No. 297/79-C.E.