Processed cotton fabrics lost exemption where mercerising and other power-driven operations went beyond the notification conditions.

Cotton fabrics processed with the aid of power did not qualify for exemption under Notification No. 130/82 because that concession applied only to processing without power. Exemption under Notification No. 253/82 also failed because the fabrics had undergone mercerising and other additional operations beyond the listed processes. The partner's unretracted admission, supported by customer statements, established that mercerising, starching, stentering, calendering and folding were carried out with power. On that basis, the exemption claim was not available and the duty demand, confiscation and penalty were sustained.

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Issues: Whether cotton fabrics processed by the appellants were entitled to exemption under Notification No. 130/82 dated 20-4-1982 and Notification No. 253/82 dated 8-11-1982 when the processing included mercerising and other operations carried out with the aid of power.

Analysis: The partner of the appellant firm had admitted that the mill carried out mercerising, starching, stentering, calendering and folding with the aid of power, and that no Central Excise licence had been obtained. That statement was not retracted. The statements of customers also supported the finding that mercerising was in fact undertaken and charges were collected for that process. Notification No. 130/82 applied only to cotton fabrics processed without the aid of power, while Notification No. 253/82 granted exemption only where the fabrics were subjected to the listed processes and not to additional unlisted processes. Since mercerising and other power-driven operations were established, the conditions of both notifications were not satisfied.

Conclusion: The exemption claim failed and the duty demand, confiscation and penalty were sustained against the appellants.

Ratio Decidendi: An exemption for processed cotton fabrics is unavailable where the processing is shown by admission and corroborative evidence to include mercerising or other unlisted operations carried out with the aid of power, contrary to the conditions of the notification.

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