SUNSHINE EXPORTS PVT. LTD. Vs. CCE

JUDGEMENT

(1.) By this appeal, the appellants are challenging the correctness and validity of the Order -in -Original No. 52/2001 dated 29.11.2001 passed by the Commissioner of Central Excise, Coimbatore. By this order, the Commissioner has confirmed the demands on the basis of investigations carried out by department to hold that the appellants had manufactured and cleared Shrink Proof Fabrics falling under Chapter sub -heading No. 5207.29 of the Central Excise Tariff. The appellants are job workers who had received 100% cotton fabrics from various suppliers for undertaking the processes such as washing, zero -zero processing and starch padding. After processing, the appellants sent back the materials and collected job -charges. The goods were all returned back to the supplier, who is a 100% EOU. The appellant's contention is that they do not have the facility of remanufacture of shrink proof fabrics and in proof of their contention, they had produced a letter dated 18.6.2001 issued by the South India Textile Research Association (SITRA). At the request of the appellants, the officials of SITRA visited the factory and conduct the study. In an unequivocal terms, they have certified that appellants do not have facility to carry out shrink proof process on cotton fabrics. They have stated in the certificate that for the purpose of manufacture of shrink proof fabric, a stenter with four or five chambers are required. On examination of the zero -zero machine which is installed in the appellant's factory the report states that "appellant have not installed the stenter machine and hence there was no process of shrink proofing in terms of definition of "Shrink proofing" appearing in the notification No. 8/96 -CE dated 23.7.96 amended from time to time".

(2.) The notification granted the benefit of exemption to the cotton fabrics processed with the aid of zero -zero machine. However, the notification clearly indicated in Explanation -I that "for the purposes of the woven fabrics of cotton, "calendering" shall include processing of cotton fabrics with the aid of zero -zero machine without a stenter attachment". The appellant's case is that as they have not installed the stenter machine, therefore, they have not manufactured any shrink proof cotton fabrics. They also relied on several test reports which were carried out in the purchasers' factories which had clearly indicated the parameters of shrinkage as given in the notification and was certified that it has not satisfied the same. It was against the parameters laid down terms of guidelines issued by the Board vide their letter F. No. 15/110/64 -CX 1 dated 27.4.64 which laid down that shrink proof fabric cotton marketed should have a residual shrinkage to the extent of 1.5% and less. It was stated by the appellants through the test reports produced that the shrinkage was much more than the residual shrinkage in terms of Board's circular. A specific stand was taken that in terms of the said circular, the circular itself had clearly stated that further proof could be adduced by revenue to show that the fabric was actually marketed as shrink -proof fabrics. It was stated that they had not marketed the cotton fabrics as shrink -proof fabrics as the same was cleared to the supplier of raw material. In the absence of any proof of marketability of the item as a shrink -proof, the charges that appellant had manufactured shrink -proof fabric is not sustainable, was the stand taken by appellant. They have further stated that the Board's guidelines issued in the year 1964 had no validity after the introduction of new Central Excise Tariff which came into force from 1.3.1986. The CBEC vide their circular No. 38/38/94 -CX.4 dated 27.5.94 had withdrawn the said instructions/guidelines/tariff advices issued in the context of erstwhile First Schedule for interpretation of new Central Excise Tariff. Therefore, it was contended that the Commissioner has based his finding solely on the basis of parameters laid down in the said guidelines issued in 1964 which is totally unsustainable and is violative of principles of natural justice. it was further submitted by the appellants that the Commissioner has relied on certain private documents to arrive at the conclusion that the shrinkage was less than 1.5% in view of certain chemical being used by the appellants during in process as revealed from the registers maintained by the appellants. It was contended that appellants do not have any facility to test he shrinkage and any shrinkage done through any other process than the stenter machine was of no consequence. Further, the shrinkage did not specify the percentage laid down in the said circular. It was also submitted that the Commissioner had himself noted in the order the details of the shrinkage but had over looked the fact that fabric also got elongated and there was shrinkage which was more than the laid down parameter. Therefore, the reliance on private registers is not as per law in terms of the rulings of the Tribunal rendered in the following cases :

(3.) We have heard Ld. Counsel Shri S. Venkatachalam for the appellants and Ld. SDR Smt. R. Bhagya Devi for the Revenue.