AMRITSAR SWADESHI WOOLLEN MILLS Vs. CCE

JUDGEMENT

(1.) In this appeal filed by M/s. Amritsar Swadeshi Woollen Mills the issue involved is whether woollen fabrics come into existence during the process of manufacture of blankets.

(2.) Shri R.L. Mehra, learned Consultant, submitted that the department has confirmed the Additional Excise duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 on the ground that they had manufactured shoddy woollen fabrics which have been captively consumed by them in the manufacture of shoddy woollen blankets; that out of 3027 blankets, 1734 were manufactured as blankets having fringes at the loom stage which fact had been verified by the Commissioner (Appeals) from the production register and challenged at the time of hearing; that uncut rolls of blankets manufactured with fringes was also produced before the Commissioner (Appeals); that in view of these facts the Commissioner (Appeals) was not justified in holding that there was no evidence to prove that these were manufactured as blankets having fringes; that the balance of 1293 blankets were having dividing line at the unprocessed stage; that the so called running length fabric at unprocessed stage has predetermined dividing lines clearly indicating that these are blankets of a predetermined size; that after processing, the blankets are cut at the point of the dividing line; that as such at no stage the so -called processed fabric emerges in the manufacture of blankets. Finally the learned Consultant submitted that the exercise is Revenue neutral as if they are ordered to pay Additional Excise duty they would be entitled to take the Modvat Credit under the provisions of Rule 57A of Central Excise Rules which would be utilized by them towards payments of duty on clearance of woollen fabric under Chapter 51.

(3.) Countering the arguments Shri Kumar Santosh, learned SDR, submitted that blankets come into existence only after the cotton fabric has come into being at the intermediatory stage; that if any goods manufactured by an assessee are captively consumed for the manufacture of another product it shall be deemed to have been removed from the factory as per the provisions of Rule 9 and 49 of the Central Excise Rules.