TaxTMI 
TaxTMI 
2010 (10) TMI 19
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....all the appeals is similar, these are disposed of by this common judgment. However, for the purpose of appreciating the controversy, a brief reference to the facts in Civil Appeal Nos.1689-1690 of 2003, relating to the same assessee, would be necessary. These are: The assessee company is engaged in the manufacture of knitted pile fabrics as well as knitted hosiery fabrics of man-made fibres. Admittedly, till 30th September 2000, the assessee was declaring the processed goods as dutiable and was paying Excise duty on the same. However, on 3rd October 2000, the assessee submitted a revised declaration claiming that the goods manufactured by it were subject to Nil rate of duty in terms of Notification No.06/2000-CE dated 1st March 2000 which came into effect from 1st October 2000, forming part of General Exemption No.66, prescribing Nil rate of duty on "unprocessed knitted or crocheted fabrics", as also under Notification Nos. 9/96 and 18/96. On receipt of the revised declaration, a show cause notice dated 12th December 2000 was issued to the assessee, questioning as to why its stand be not rejected and CENVAT @ 16% ad valorem with AED(ST) @ 8% and AED (TTA) @ 15% of the Exci....
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.... proved that the noticee has supplied knitted pile fabrics as well as knitted hosiery fabrics to the buyers sold by raising commercial invoices and most of the pile fabrics supplied by the noticee as knitted fabrics were not having back coating and even if process of back coating was conducted on some quantity, the noticee have claimed that the drying was done naturally. There is nothing on record to controvert the claim that back coated pile fabrics were not dried naturally or cannot be dried naturally. Thus, I find that the show cause notice itself does not contain any of the ingredients required to substantiate the charge that the processes undertaken by the noticee amounts to manufacture in terms of Chapter Note 4 to Chapter 60 of Central Excise Tariff Act 1985 so as to attract Central Excise Duty. In view of the above discussion, I hold that the processes undertaken by the noticee in the manufacture of pile fabrics sold as knitted fabrics do not amount to manufacture in view of Hon'ble Supreme Court judgment in Maharashtra Fur Fabrics Ltd. reported as 2002 (145) ELT 287 (SC) and the definition of processes as defined above and therefore, the goods supplied by the noticee we....
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....1 (130) E.L.T. 770 (Tri.-Del.). 10. It was strenuously contended that so far as the process of shearing was concerned, the issue is no more res integra in the light of the decision of this Court in Mafatlal (supra) wherein it had been held that shearing process did not have the effect of bringing about any change in the grey fabric. According to the learned counsel, in view of the concurrent findings of fact recorded by both the authorities below, the test enunciated in the said decision stands satisfied. It was, thus, asserted that there being no permanent change in the character of the fabric even when the grey fabric is back-coated or sheared, the ratio of the said decision is in all force to the facts in hand and, therefore, the appeals deserve to be dismissed. In so far as the question of process of electrifying polish was concerned, learned counsel submitted that such a plea was neither a part of the show cause notice nor was raised by the Revenue either before the Commissioner or Tribunal, the Revenue cannot be permitted to raise such a plea at this stage. 11. Before embarking on an examination of the rival submissions, it would be instructive to take note of the tests....
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....g, printing, water- proofing, shrink-proofing, tentering, heat-setting, crease-resistant, organdie processing or any other process or any one or more of these processes shall amount to manufacture'. Heading No. Sub-heading No. Description of goods Rate of of duty Basic Additional (1) (2) (3) (4) (5) 60.01 Pile fabrics, including 'Long pile' fabrics and terry fabrics, knitted or crocheted - 'Long pile'fabrics: 6001.11 -- Of cotton 16% 8% 6001.12 -- Of man-made fibres 16% 8% 6001.19 -- Of other textile materials 16% - Looped pile fabrics: 6001.21 -- Of cotton 16% 8% 6001.22 -- Of man-made fibres 16% 8% 6001.29 --Of other textile materials 16% - Other: 6001.91 -- Of cotton 16% 8% 6001.92 -- Of man-made fibres 16% 8% 6001.99 -- Of other textile materials 16%  ....
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.... submitted by the assessee, the said processes are described as follows:- "a. Carding: Firstly, the fibre/synthetic waste/mixed fibre and waste is fed into the carding machine which opens the compressed material and after loosening the same, sliver is made. b. Knitting: Thereafter, the carded sliver plus yarn is inserted into the loops of the circular knitting machines and the fabric is made. c. Shearing: The next process is on the back- coating machine where the cloth is sheared, polished and the pile is kept to the required level. d. Back-coating: The final process is on the back coating machine where the back coating is done and fur is ready. Then, it is measured on semi- automatic measuring table and the rolls are made which are ready for show in the Excise Bond room and for sale." In this background, we find it difficult to hold that the processes of shearing or back-coating are of the same nature as other processes mentioned in the said chapter Note and therefore, would fall within the scope and ambit of "any other process." 16. Adverting to the second issue, noted supra, the Revenue has not controverted the afore-stated factual position, nor has it adduced ....