TaxTMI 
TaxTMI 
1999 (2) TMI 185
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....monly known as denim fabrics and had sought classification of the same under Tariff Heading 5207.29 by claiming the benefit of Notification No. 48/90-C.E. 3. The process of manufacture undertaken by them had been described in the impugned order which is extracted below :- "The fabric is singed to remove/burn any protruding fibres; and is passed through heating/brushing machine to remove any excess fly or dust. The fabric then passes through a foam/vacuum unit where the foam dampens the fabric allowing it to be stretched. The fabric then passes into a shrinking section where, by the use of a thick rubber belt subjected to tension by a steel roller, is compacted and shrunk. Finally the fabric is gently dried in series of steam heated drums. The fabric is taken out and inspected for faults or fabric defects and cut into 100 metre length for despatch." 4. The authorities below had provisionally assessed and had accepted their claim. However, after due verification a show cause notice dated 6-3-1996 was issued bringing to the notice of the appellants the reasons for them to deny the benefit of the notification. The reasons given in that show cause notice to deny benef....
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....n the Montforts machine appear to be processes other than the processes mentioned in Table annexed to Notification 253/82-C.E., dated 8-11-1982 (and Notification 40/95, dated 16-3-1995 as amended by Notification 83/95-C.E., dated 24-4-1995) for the following reasons :- (a) the process performed on the integrated M/s. Montforts range achieves controlled compressive shrinkage of the fabric. The average shrinkage obtained is between 12.5% to 14% with a maximum potential shrinkage of 18% (warp wise). The residual shrinkage in the fabric does not exceed 3.0% and the average residual shrinkage is 1.88% (warp wise). (b) the foam-vacuum application technique is a commercially established process of applying foaming, damping, wetting and organic surface active agents for achieving shrinkage of the fabric. (c) in addition to achieving requisite shrinkage in denim, the agents used in the foam vacuum process impart suppleness, softness and improve the handle and sewability of fabric. 9.0 Under Chapter Note 3 to Chapter 52 of CET Act, 1985 "any other process" would amount to manufacture. The process done on the M/s. Montforts machine would amply qualify for this ....
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....ion under the above said notification may be verified by executive check". 6. The appellants have also relied on the Technical Literature in the form of extracts of books etc., and also a certificate dated 24-8-1995 issued by the South India Textile Research Association. 7. The appellants argued their case to point out that the process carried out by them did not bring into existence the declared process in Note 3 to Chapter 52 and the process did not also bring into existence a lasting change on the material and hence the process did not result in the process of manufacture in terms of Section 2(f) of the Act. Inter alia they also pleaded that the activities fell within the declared activities in the notification. 8. The Assistant Commissioner in the Order-in-Original has recorded their pleas in para 2.0 and 2.1. He has correctly raised the question to be answered in para 6.0 and 6.1. While answering the question that "any other process would bring a lasting change", the Assistant Commissioner relied on the appellant's expert opinion which is not spelt out but, however, concluded on that basis that there was a minor change to the fabric. He has also held in....
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....94 the buyer complains as follows :- "A lot of customer complaints are being received as regard to the quality of the fabric with specific reference to shrinkage of material which is 2" to 2.5" (6 to 7%) in general and is much higher as compared to the material of our competitor companies. In case of Aravind Mills, it is 1/2" to 1" (1 to 2%) thus making the marketing of the product all the more difficult. ......" (Para 2 of Page 2 of their letter) (Emphasis supplied). 6.2.4 These facts lead me to the following conclusions : The fact of compressive shrinkage amounting to a lasting change is not denied by the assessee. Montforts machine imparts lasting changes to Denim which are irreversible. The fabric is unmarketable in unprocessed form/ The foam-vacuum application of dampening and wetting agents imparts lasting changes resulting in improved suppleness, handle and sewability of the fabric as is evident from the statement the chemical supplier. 6.3 Thus it is clear that the processes done on Denim bring amount to `manufacture' within the meaning of Note 3 to Chapter 52 of the CET Act read with Section 2(f) of the Central Excises and Salt Act 1944. In f....
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.... is required to be allowed for proper determination of all the points arising in the appeal. 11. We have heard learned Advocate for the appellants Shri V. Lakshmikumaran and Shri M.C. Sharma, learned Chief Departmental Representative for the revenue. 12. We have gone through the entire records and examined both the orders. Since we have come to the conclusion on the completion of the hearing that the matter has to be remanded to the original authority, we are not delineating all the arguments raised by both sides including the written submissions, but would straightaway go to the findings arrived at by us to show as to why both the orders are required to be set aside for the purpose of remand for de novo consideration. 13. The Commissioner (Appeals) in the order has based his findings solely on the judgment of the Tribunal rendered in the case of Amtex India Pvt. Ltd. (supra). In this judgment the Tribunal considered the scope of Notification No. 253/82-C.E., dated 8-11-1982. However, we notice from this order that the Tribunal did not deal with the terms "any other process" as appearing in Note 3 to Chapter 52 of the Tariff and as amounting to manufacture u....
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....acture in its extended meaning and the expression "unprocessed" in the exempting notification draws its meaning from that context. The principle of construction considered appropriate by the Tribunal in this case appears to us to be unsupportable in the context in which the expression "or any other process" has to be understood. 9. It was then contended by Sri Sorabjee that "plain-calendering" process neither adds anything to the cotton fabric nor the effect brought about by it is lasting. It is, according to learned counsel, nothing more than pressing the cotton fabric by running it between plain rollers to improve its appearance. Learned counsel submitted that it was purely a temporary finish and that having regard to the nature of the process it is plainly manifest that it does not impart to the fabric either of the two ingredients necessary to bring the process into the family of processes envisaged by the preceding expressions in the section. Sri A.K. Ganguly, learned Counsel for Revenue, however, submitted that this aspect requires investigation of the factual aspects and that since the Appellate Tribunal had not specially examined this aspect and recorded its finding....
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....eir reply to the show cause notice the noticees clearly contested this issue to the contrary. Therefore, this conclusion is not supported by the evidence on record. (c) Again in para 6.3 the Assistant Commissioner has again recorded that the issue that the process does not amount to manufacture has not been contested by the assessee. For the same reasons as mentioned above, this is a mis-appreciation of the evidence on record. (d) The Assistant Commissioner has not analysed as to how in the face of the test report noted above issued by the Office of the Deputy Chief Chemist, he has still held that the process amounts to a lasting change. We also find that in coming to this erroneous conclusion the Assistant Commissioner has depended merely on some write-up of Shri Veeraraghavan of M/s. COMTEC, Surveyors, Valuers and Assessors by profession. 16. In the last para of this opinion as contained in page 21 of the Paper Book, it has been submitted as follows :- "(iv) The process performed on the Montforx machines is for the reasons stated under Section (ii) (a) is only of compressive shrinkage nature and control of resifual shrinkage of the fabric and hence....