COMMISSIONER OF CENTRAL EXCISE Vs. S. KUMAR LTD.

JUDGEMENT

(1.) The Respondent herein is undertaking the work of processors of various textile fabrics and also undertakes the job work pertaining to the processing of knitted pile fabrics. For this purpose they have been receiving knitted pile fabrics in grey form from M/s. Dhvani Terefab Exports Pvt. Ltd. in running length of 300 metres. The job undertaken by the Assessee on the said fabric is that of washing, dyeing and bleaching, hydro-extraction, tumble dyeing and drying. After doing the aforesaid job work, the fabric is handed over back to M/s. Dhvani Terefab Exports Pvt. Ltd. on whose behalf the aforesaid job is undertaken. It appears that thereafter M/s. Dhvani Terefab Exports Pvt. Ltd. sends that fabric to some other processor who cuts the same into various lengths and also does sewing and hamming. Then it emerges in the form of towels. Question is as to under which clause the aforesaid process undertaken by the Respondent Assessee would fall. The Appellant treated the same as manufacture of goods in the nature of towels and issued show cause notice on the basis that the said goods to be "made-up articles" under Heading 63 of the Central Excise Tariff Act, 1985 and imposed the duty accordingly. As per the Assessee the goods fall under Heading 60 of the said tariff which are granted exemption as no final product came into existence at the relevant time.

(2.) A perusal of the show cause notice would indicate that the Assistant Commissioner had referred to Section Note 5(f) of Section XI of the Central Excise Tariff Act which reads as under

(3.) The defence set up by the Assessee was that it would not fall under the aforesaid Section Note inasmuch as the process undertaken did not amount to any knitting or crouching to shape and no separate items had come into existence. However, reference was also made to Section Note 5(b) of Section XI and therefore discussion was carried out on the aforesaid Note as well by the Assistant Commissioner in his order. Section Note 5(b) read with as under: