COMMISSIONER OF CENTRAL EXCISE Vs. MADURA COATS LTD.

JUDGEMENT

(1.) THESE three appeals arise before us pursuant to remand ordered by Hon'ble Supreme Court in Civil Appeal No. 2108 -2110/1998. We have been directed to pass a reasoned order in the case. Ld. Collector (Appeals), whose order is under challenge in these appeals of the Revenue, held the respondents to be eligible for exemption under Notification No. 297/79 -CE in respect of fabrics which they manufactured and cleared during the period of dispute. The Notification granted exemption from payment of additional excise duty leviable under Section 3 of the Additional Duty of Excise (Goods of Special Importance) Act, 1957 in respect of man -made fabrics falling under Chapter 54 or 55 of the Schedule to the Central Excise Tariff Act, 1985 when subjected to the finishing processes specified in the Table annexed thereto. The proviso to the main part of the Notification reads as under: Provided that no such exemption shall apply if man -made fabrics, falling under the said Chapters are subjected to any process or processes specified in the said table, within the same factory in which they have been subjected to any process, other than the processes specified in the Table. The table annexed to the Notification mentioned six processes, of which the sixth one arises for interpretation in this case and the same reads as under: Hydro -extraction, that is to say, mechanically extracting, or mechanically squeezing out water from the fabric,

(2.) THE issue arising for consideration is whether the process to which the respondents subjected their fabrics would fall within the meaning of "Hydro -extraction" as defined in the Table to the Notification and also whether any process other than those described in the said Table was also undertaken by the party. If it is found that "hydro -extraction" specified above was done on the fabrics in the respondent's factory and that no process other than those mentioned in the Table Annexed to the Notification was so done, the respondent will be held eligible for exemption under the Notification.

(3.) AFTER examining the records and hearing both sides, we find that the case of the respondents is that the process of "can -drying" to which the grey fabrics were subjected to in their factory during the period of dispute is covered by "hydro -extraction" mentioned at Sl. No. 6 of the Table to the Notification. They have not contested the account of the process of can -drying given in the Revenue's memoranda of appeals. We extract this account of the process hereunder: The man -made fabrics as processed by M/s. Madura Coats Ltd are subject to the process of can -drying. In the process of can -drying, fabrics are first passed through squeeze mangles and then passed through rollers in which steam is continuously passed. The water content of such fabrics gets evaporated while passing through the steam rollers. The fabrics are commercially known as can -dried fabrics. According to ld. SDR, can -drying cannot be equated to "hydro -extraction". According to Shri S.S. Thakur, ld. representative of the respondent -Company, the process, which involves use of machines (squeeze mangles) for removal of water and also machines (rollers) for further drying of the fabrics, is very much a mechanical process fitting in the definition of hydro -extraction under the Notification. It is also submitted that "can -drying" does not amount to 'manufacture' under Section 2(f) of the Central Excise Act or 'any other process' mentioned under Heading 54.09. He also cites decisions touching the manufactural aspect.