1998 (1) TMI 238 - AT - Central Excise

Microsize Cutting Classifies as RG 1 Stage under Excise Tariff Act

The judgment clarified that cutting flocks into microsize fragments not exceeding 5 mm constitutes the RG 1 stage for classification under the Central ... Flocks Issues:1. Classification of flocks under the Central Excise Tariff Act, 1985.2. Determination of the RG 1 stage for flocks during the manufacturing process.Detailed Analysis:1. The judgment revolves around the classification of flocks under the Central Excise Tariff Act, 1985. The appellants, engaged in manufacturing flocked fabrics falling under subheading 56.06, used flocks they manufactured in their factory. These flocks were produced by sorting duty-paid nylon and viscose fiber/waste into lengths not exceeding 2 mm and subjecting them to various processes like washing, drying, dyeing, and sorting. The dispute arose regarding the RG 1 stage of these flocks, with the appellants contending that flocks attain distinct identity upon cutting into microsize fragments not exceeding 5 mm, while the Department argued that further processes were necessary for the flocks to be considered ready-to-use. The judgment delves into whether the flocks are fully manufactured at the cutting stage or require completion of subsequent processes for classification under the Tariff Act.2. The determination of the RG 1 stage for flocks during the manufacturing process is crucial in this judgment. The appellants argued that cutting the flocks into micro lengths not exceeding 5 mm marked the completion of manufacturing, as subsequent processes were aimed at enhancing utility and serviceability for use in fabrics. They contended that purchasing cut-flocks from the market for further processing demonstrated that the flocks were marketable post-cutting. Conversely, the Department asserted that processes like washing and drying did not create a new product beyond flocks, classifiable under Heading 56.01. The judgment analyzed a previous case involving the same appellants, where it was held that subsequent processes did not constitute manufacturing, indicating that flocks reached a marketable stage pre-processing. Ultimately, the Tribunal concluded that the RG 1 stage for flocks should be fixed at the cutting stage, not after storage in the air-conditioned room, as the processes post-cutting did not amount to manufacturing, aligning with the earlier ruling.In conclusion, the judgment provides clarity on the classification and manufacturing stage of flocks under the Central Excise Tariff Act, emphasizing that the cutting of flocks into microsize fragments not exceeding 5 mm constitutes the RG 1 stage. The analysis highlights the distinction between preparatory processes and actual manufacturing, ultimately allowing the appeal by setting aside the previous order.