1995 (5) TMI 111 - AT - Central Excise

Summary

Issues:
1. Classification of fabrics under Central Excise Tariff.
2. Applicability of handloom cess under the Khadi & Other Handloom Industries Development Act, 1953.
3. Interpretation of Notification No. 115(E) and its provisos.
4. Legislation by incorporation vs. referential legislation.

Analysis:
1. The case revolves around the classification of fabrics under the Central Excise Tariff. The appellants manufactured man-made fabrics initially falling under Item 22(i)(a) and later classified under Item 22(3) after processing. The dispute arose regarding the handloom cess payable on these processed fabrics.

2. The issue of the applicability of handloom cess under the Khadi & Other Handloom Industries Development Act, 1953 was raised. The Assistant Collector held that the processed man-made fabrics were excluded from the exemption of handloom cess as per Notification No. 115(E). The Collector (Appeals) upheld this decision.

3. The interpretation of Notification No. 115(E) and its provisos was crucial in this case. The appellants claimed exemption from handloom cess under this notification, citing Central Excise duty exemption under Notification No. 225/82. The second proviso of Notification 115(E) excluded processed man-made fabrics from the exemption.

4. The argument of legislation by incorporation versus referential legislation was debated. The appellants contended that man-made fabrics were not covered under the original Act for levying the cess. However, the tribunal viewed it as a case of referential legislation, citing a similar case precedent regarding the expansion of the meaning of "cotton fabrics" under a different Act.

In conclusion, the tribunal rejected the appeal, stating that the processed man-made fabrics manufactured by the appellants were excluded from the handloom cess exemption as per the second proviso of Notification 115(E). The classification under the Central Excise Tariff and the specific criteria mentioned in the notifications were crucial in determining the liability for handloom cess.