Processed man-made fabrics excluded from handloom cess exemption where the proviso expressly carved out such goods.

Processed man-made fabrics were held outside the handloom cess exemption under Notification No. 115(E) because the notification's proviso excluded such goods. The tariff description in Item 22 of the Central Excise Tariff was treated as governing the cess levy by reference, so later expansion of that description applied for cess purposes. As the goods were man-made fabrics that had undergone impregnation, coating and lamination, they satisfied the description of processed man-made fabrics and remained liable to handloom cess. The exemption was therefore unavailable.

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Issues: Whether processed man-made fabrics falling under Item 22(3) of the Central Excise Tariff were exempt from handloom cess under Notification No. 115(E) dated 1-3-1975, and whether the relevant definition in the Khadi and Other Handloom Industries Development Act limited the levy to the pre-existing tariff description.

Analysis: The opening exemption in Notification No. 115(E) was held to operate generally for all varieties of cloth exempt from central excise duty, while the second proviso carved out an exclusion for processed man-made fabrics. The tariff description under Item 22 of the Central Excise Tariff was taken to govern the cess levy by reference, not by incorporation, so the later expansion of the tariff description applied for purposes of the cess. Since the goods were admittedly man-made fabrics and had undergone impregnation, coating and lamination, they answered the description of processed man-made fabrics and satisfied the exclusion in the proviso.

Conclusion: The exemption from handloom cess was not available, and the levy was sustained against the assessee.

Final Conclusion: The appeal failed because the goods fell within the excluded category of processed man-made fabrics and remained liable to handloom cess.

Ratio Decidendi: Where an exemption notification excludes processed man-made fabrics, fabrics that are man-made and have undergone processing fall outside the exemption even if they are otherwise exempt from central excise duty.

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