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TMI Blog2010 (4) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Whereas the Appeal No. 280/06 has been filed by M/s. Amar Processors (P) Ltd. (hereinafter referred to as assessee) against confiscation of the goods classifying the same under CH No. 5207.09 which is to be redeemed on payment of fine of Rs. 12,000/- and payment of appropriate duty along with penalty on the appellant and the partner of the firm. 2. The facts of the case are that on the basis of intelligence that the assessee unit was engaged in manufacture and clearance of excisable goods without obtaining Central Excise Registration and evaded payment of Central Excise duty leviable on fabrics processed in the unit, the officers of DGCEI carried out the search and seized documents and records. During the search, one hot air stenter mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture. As per the provision contained in Notification No. 3/2001-C.E., dated 1-3-2001, cotton fabrics falling under CH No. 52.07 are exempt from payment of duty if they are subjected to the process of padding, calendaring and stentering. The term 'padding' has been defined for the purpose of notification as "Padding, that is to say, applying starch or fatty materials on one or both sides of the fabrics" whereas in the instant case, the process is much more complicated and involve application of many compounds and therefore do not conform to the definition of 'padding' which is exempt from duty. 3. Duty demand was confirmed along with interest and penalties as proposed in the show cause notice. On appeal before Commissioner (Appeals), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which one of the process is padding. The wording of the said notification regarding the process of padding are "Padding, that is to say, applying starch or fatty materials on one or both sides of the fabrics". Thus, it is clear that the process of padding has been defined in the said notification as application of starch or fatty materials on one or both sides of the fabrics. But, in the instant case, simply application of starch or fatty material was not the process, rather the process involved was application of coating compounds obtained by mixing many inorganic chemicals, compounds and fillers such as Topioca, Starch, Finishing Gum, Dolomite, Soft Stone, Maize Starch, Tinopal, Guar Gum, Copper Sulphate. Thus, the process carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on behalf of the assessee submitted that the Commissioner (Appeals) has held that the process of padding does not amount to manufacture in terms of Section 2(f)(v), of the Central Excise Act, 1944 there is no question of Central Excise duty. To support his contention, he placed reliance on two decisions of this Tribunal one in the case of CCE, Coimbatore v. M/s. Coimbatore Pioneer Mills as reported in 2008 (228) E.L.T. 616 (Tri.-Chennai) = 2009 (16) S.T.R. 537 (Tribunal) and another in the case of CCE, Coimbatore v. M/s. SSM Processing Mills as reported in 2008 (229) E.L.T. 392 (Tri.-Chennai). In both these cases, this Tribunal has held that padding with starch and other special process does not amount to manufacture and the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as inorganic chemicals for which the assessee is not entitled for exemption. But, we find that the Commissioner (Appeals) while deciding the duty liability has clearly held on the basis of the chemical test reports that the activity of padding by applying gum, starchy material and inorganic mineral matters, the interstics between the yarn are not completely closed and does not make any change in the character of the fabrics which returns on contact with water. In other words, no new product with distinct name, character and use has come in existence and there is no proof that the fabric undergone a process of manufacture or the process other than padding and held that the activity undertaken by the assessee does not amount to manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shes. Such a process which does not bring into existence goods with a new name, property or use, cannot be held to be manufacture. These findings of the Commissioner (Appeals) have not been challenged by the Revenue. The reliance placed by the learned SDR, in the case of M/s. Narsinggirji Mills v. CCE, Pune as reported in 2009 (241) E.L.T. 237 (Tri.-Mumbai) is not relevant in this case as there was no finding of the Lower Authorities that the process of calendering does not amount to manufacture. The facts are distinguishable to this case. We are of the considered view that in a case where the activity undertaken by the assessee does not amount to manufacture, no duty liability can be confirmed. No penalty can be imposed. 12. In these term ..... X X X X Extracts X X X X X X X X Extracts X X X X
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