2007 (9) TMI 245 - AT - Central Excise

Processed embroidered fabrics - Notification No. 63/94-C.E. - nil rate of duty - neither SCN nor the OIO seek to classify the processed goods under heading 58.05, on the other hand the Assistant Commissioner has approved the processed embroidered fabrics under chapter 5805.13 chargeable to nil rate of duty which classification has not been challenged by the Revenue before the Commissioner (Appeals) hence goods are classifiable u/h 5805.13

Summary

Issues:
Classification of embroidered duty paid cotton fabrics processed under chapter heading 5805.13 for duty exemption under Notification No. 63/94-C.E. dated 1-3-1994. Interpretation of excise duty leviable on fabrics at different stages: grey fabric stage, processing stage, and embroidery stage. Applicability of chapter note 8 to chapter 58 on processing of embroidery on grey fabrics.

Analysis:
The case involved the classification of 'Embroidered duty paid cotton fabrics processed' under chapter heading 5805.13 for duty exemption under Notification No. 63/94-C.E. The dispute arose when the Revenue contended that duty was payable on the processed fabrics under the respective chapter, even after embroidery, as per the new Central Excise Tariff. The Revenue argued that once embroidery was done on grey fabrics, processing stage duty was required to be collected under the respective chapter. However, the Assistant Commissioner approved the processed embroidered fabrics under chapter 5805.13, chargeable to nil rate of duty, which was not challenged by the Revenue before the Commissioner (Appeals).

The Tribunal analyzed the issue in light of the Larger Bench decision in the case of M/s. Haren Textiles Limited v. CCE, Mumbai, and the case of Beauty Art Dyers & Cleaners Pvt. Ltd. v. CCE, Mumbai. The Tribunal noted that chapter note 8 to chapter 58 does not apply to the processing of embroidery on grey fabrics. It was clarified that embroidered fabrics falling under chapter heading 58.05 cannot be classified under other chapters after processing. Since chapter note 8 was not in existence during the relevant period, the question of treating the process as manufacture did not arise. The Tribunal emphasized that the processed goods were approved under chapter 5805.13 by the Assistant Commissioner, and this classification was not challenged by the Revenue before the Commissioner (Appeals).

Ultimately, the Tribunal dismissed the Revenue's appeal, finding no merits in the argument presented. The decision was based on the established legal interpretations regarding the classification and duty implications at different stages of fabric processing, as well as the specific classification approved for the processed embroidered fabrics in this case.