CCE Vs. SSM PROCESSING MILLS

JUDGEMENT

(1.) THE captioned appeals have been filed by the Commissioner of Central Excise, Coimbatore. As per the impugned orders, the Commissioner dropped the proposal to deny the exemption from duty extended by Notification No. 253/82 dated 08/11/82 to 'cotton polyester blended lungi fabrics' falling under the CSH. 52.06 of Central Excise Tariff processed and cleared by the respondents. Following intelligence received, premises of SSM were searched on and the processed lungi fabrics of value Rs. 46,830.74 were seized. The declared processes undertaken by the respondents were curing, scouring, stentering, calendaring etc. Scrutiny of the private records of the respondents revealed that the respondents had subjected the impugned fabrics to chemical padding and special finishing. The exemption contained in Notification No. 253/82 dated 08/11/82, was not available to goods which were subjected to processes other than those specified in the notification. The processes such as padding with chemicals and special finishing processes were not specified in the notification. The highest amount proposed to be demanded from the respondents pertained to SSM. SSM was alleged to have undertaken also the process of mercerizing which disqualified their clearances of lungi fabrics for the exemption under the said notification. Therefore, we examine in detail the eligibility of SSM to the exemption first. After due process of law, the Commissioner decided that SSM did not undertake any process which constituted manufacture.

(2.) IN adjudication, the Commissioner found that the process of padding with starch and chemicals and special processes undertaken by SSM did not impart a characteristic of lasting nature to the fabrics. As per Board's Circular No. 52/10/89 - CXI dated 18/10/89 and clarification dated 24/10/89, assessees could avail exemption when padding process was undertaken using starch and chemicals. After arranging verification of the assessee's claim of consumption of starch in the process of production of lungi fabric, the Commissioner concluded that starch was used in the padding process by SSM. He found that 'special finishing' did not refer to any specific process in technological parlance. It meant only use of certain chemicals in the various processes undertaken by SSM to add softness and gloss to the fabrics. As regards mercerization, after referring to its meaning in the technical dictionary, he found that mercerization of dyed fabrics was technically infeasible.

(3.) IN the written submissions filed by the respondents it is submitted that the activity of sintering alone was undertaken on the lungies. Stentering machine was different from padding machine. All the processes cited in the Notification 253/82 -CE wore off. The same was not true in the case of processes like printing, bleaching, dyeing, mercerizing, waterproofing and organdy processing which imparted lasting character on the fabrics. Special finishing was not a process amounting to manufacture. It referred only to the softness of the fabric and had no other meaning.