Handloom cess exemption for cotton chindies upheld where goods did not fall within the notification's excluded cloth categories.

Cotton chindies of cotton fabrics were treated as exempt from handloom cess under Notification No. 115(E) dated 01.03.1975. The notification was construed to exempt all varieties of cloth except unprocessed Medium-A, Medium-B and Coarse cloth falling within the stated exclusions. The Tribunal also relied on its earlier view and the administrative clarification that fabrics exempt from basic excise duty would not attract handloom cess. As no material showed that the goods fell within any excluded category, the items were held exempt and the departmental appeal was dismissed.

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Issues: Whether chindies of cotton fabrics are exempt from handloom cess under Notification No. 115(E) dated 01.03.1975.

Analysis: The exemption notification was construed to exempt all varieties of cloth except items falling under Medium-A, if unprocessed, and Medium-B and Course, if unprocessed. The Tribunal followed its earlier view that cotton chindies were not liable to handloom cess and also noticed the administrative clarification that fabrics exempt from basic excise duty would not attract handloom cess. No material or finding established that the goods in question fell within the excluded categories under the notification.

Conclusion: The items were held to be exempt from handloom cess, and the department's appeal was dismissed.

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