TaxTMI 
TaxTMI 
1989 (1) TMI 127
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....terest at 3 per cent of the duty under Rule 49A(2) of the Central Excise and Salt Rules, 1944, as according to the Tribunal, the cotton-fabric cleared is not 'Grey' (unprocessed) cotton-fabric. 2. Appellant is engaged in the manufacture of cotton-fabrics in its composite mills and opted under Rule 49A for facility of payment of duty of excise payable on the yarn to be deferred until the clearance of the cotton-fabrics manufactured there from. The said Rule 49A provides for payment of interest on the excise duty payable on the yarn which is deferred till the manufacture and clearance of the fabrics made out of the dutiable yarn. As such payment is deferred, at the instance of the option of the manufacturer, till completion of manufacture a....
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....ses of Rule 49A(1)(b). In regard to 'calendering', the Tribunal relied upon the views expressed by it in the case of Siddeshwari Cotton Mills Ltd. and Another v. Collector of Central Excise, Calcutta [1984 (18) E.L.T. 297]. The relevant part of Rule 49A provides : "(1) when the cotton fabrics are cleared grey (unprocessed), the yarn duty payable shall be - (a) the appropriate duty payable on such cellulosic spun yarn or cotton yarn, or both, as the case may be; plus (b) one and a half per cent of the duty payable on such cellulosic spun yarn or cotton yarn, or both, as the case may be, by way of interest on the amount of yarn duty; (2) when the cotton fabrics are cleared after processing, the yarn duty payable shall be - (a) the approp....
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....n 2(f)(v) of the Act, but only in the context of estimating the extent of time consumed by the process or processes as that is the criterion for the choice of the rate of interest. The purpose and intendment of the rule, says Shri Ganguly, is to provide for the rates of interest on the deferred yarn-duty depending on the time consumed by the processing. If 'grey-cloth' directly obtained from the loom - and that is what 'grey fabric' or 'greige' in textile parlance means - is cleared then a lesser rate of interest is attracted. But, where, as here, the 'grey fabric' is subjected to time-consuming processes the rate of interest, says Shri Ganguly, would be the higher rate of 3 per cent, taking note of the delays consequential upon such proces....
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....e 'grey-fabric'. With this legislative estimate of the period of deferment appropriate to a situation attracting 3% interest, the matter has necessarily to be examined by those standards, which in turn, bring in the idea whether the process or processes concerned are such as to change the nature of the 'grey fabric'. This leads to the question whether 'calendering' and 'shearing', though by themselves are finishing processes, render the 'grey' fabric cease to be so. 8. Shri Sorabjee submitted that the process of calendering is nothing more than mere pressing of the 'grey fabric' by running it through plain rollers to impart a better finish, which is a mere temporary finish. Shri Sorabjee referred to some of the notifications issued under S....
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.... desirable, such as most cottons, many linen and silks, and various man-made fabrics ............................................................ Calendering is not usually a permanent process." In "Glossary of Terms relating to treated fabrics" I.S. 2244-1972 published by the Indian Standards Institution it is stated: "Calender - A machine comprised of at least three heated rollers, used to produce film and sheet material." "Calendering - A mechanical method done by rollers to provide glaze, glossiness, hardness, lustre, shine and even embossed designs to fabrics. Calendering is usually done to impart a special finish to fabrics." It is accordingly urged by Shri Sorabjee that calendering does not alter the nature of the 'grey fabric' a....
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....e of the fabric i.e. cropping. 10. Both 'calendering' and 'shearing' involve an assortment and variety of processes, some of which might and some others might not affect or alter the nature of the fabric. Both the expressions, 'calendering' and 'shearing' are collective expressions representing a number of sub-species of operations which, depending upon the nature of the particular operation, may or may not alter the nature of the 'grey fabric' as such. Shri Sorabjee submitted that in the present case "calendering" was not done by 'grooved' rollers or cylinders but only by plain rollers and the "Shearing" operation was only to cut-off protruding stray fibres from the 'grey fabric', and that actual processes of 'calendering' and 'shearing'....