TMI Blog1992 (10) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant period in question, are the main points to be considered in all these appeals. 3. The above appeals were filed by the respective parties except Appeal No. E/2878/90-D in the case of M/s. Prakash Calender Factory - 1992 (61) E.L.T. 81 (Tribunal) which was filed by the Department. Department also filed an appeal on the similar issue since Collector of Central Excise Customs, Ahmedabad dropped the proceedings holding that an explanation was added to the Original Notification No. 253/82 by issue of Notification No. 213/88 dated 15-6-1988 was clarificatory in nature which takes retrospective effect and, accordingly, that assessees were eligible for the exemption. He also observed in the said order that no further investigation is carried by the Officers whether the said zero zero machine, in fact, carries out process other than felt calendering. Whether any process carried on by it gives permanent type of effect like shrink proof. Remaining appeals were filed by the parties since the findings by the concerned Adjudicating Authorities were not in favour of the assessees by the respective impugned orders. 4. We have heard Shri R.S. Dinkar, Shri R.K. Kapoor and Shri V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne. 6. The next important point was raised by them that relevant exemption Notification issued under the Central Excise Rules, viz., 253/82-C.E., dated 8-11-1982 was amended by Notification No. 213/88-C.E., dated 15-6-1988 inserting explanation clause. They explained that Notification No. 253/82-C.E. gave exemption to processed cotton fabrics subject to certain conditions and that one of the conditions stipulated was that if any process other than processes mentioned in the Notification were carried out in the same factory, then exemption was not available. Later on 15-6-1988 an explanation clause by amending the notification wherein it was explained that process of calendering would include processing cotton fabrics with the aid of Zero Zero machine without stenter attachment and this explanation clause would have retrospective effect and consequently, even if zero zero machine has been employed by them for processing cotton fabrics, they would be entitled to exemption as long as zero zero machine did not have stenter attachment. 7. Learned counsels appearing for the parties apart from addressing common arguments either on the point of law or on facts also raised some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order. Reliance was placed by him in the case of J.B.A. Printing Inks Ltd. v. Union of India and Others, reported in 1980 (6) E.L.T. 121 and Davangere Cotton Mills Ltd. v. Chairman, C.B.E. C., reported in 1991 (55) E.L.T. 295, in support of his contention. 9. Shri R.K. Kapoor, learned Advocate, while arguing for the appellants M/s. Jindal (India) Textile Mills, on the issue whether processing done on zero zero machine is subject to any liability of excise duty under the provisions of Central Excises and Salt Act, submitted that no tax can be levied by the Collector except by authority of law as per Article 265 of the Constitution. He said that amendment to Section 2(f) of the Act, i.e., any other process in Section 2(f) does not cover process of zero zero machine. Any other process refers to the process which is incidental to the completion of the manufactured product. Since shrink-proofing is not the ultimate product as mentioned in Section 2(f) of the Act, no liability can be fixed on the assessee in the process of shrink-proofing. Further, there is no proof that process carried on with the help of zero zero machine has a shrink-proofing effect. He said that calendering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k. (ii) Shrinkage Control. A general term for limiting shrinkage of fabrics such as compressive shrinking or resin treatment, or chlorination of wool by wet or dry processes. (iii) Shrinkage. Reduction in length and/or width of material caused by certain treatments, especially washing. (iv) Shrinking. A variety of processes for shrinking fabrics with steam, cold or hot water before cutting up and making into garments, to avoid excessive shrinkage in the garments. (v) Shrinkproof. A term that should be applied only to a fabric whose residual shrinkage is zero but is applied erroneously to fabrics that shrink little. He said that results of analysis of samples of fabrics which had undergone zero zero process drawn from two units, namely, M/s. Balaji Felts, Pali and M/s. Mangal Felt Finishing Works, are as follows :- Name of the Unit Shrinkage in Warp Shrinkage in Weft M/s. Balaji Felt 3.2% 6.2% M/s. Mangal Felts 3.9% 6.6% These results quite clearly show that shrinkage both in warp and weft is more than 1%. These samples were sent to the Chemical Examiner with the specific purpose of testing Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng given by the Assistant Collector at the earliest point of time, the parties were under the bona fide impression that the fabrics processed on zero zero machine were fully exempted from payment of duty in terms of Notification No. 253/82. Hence non-filing of declaration for the subsequent year cannot be held to be suppression of facts for invoking the larger period of limitation. He said that since the Department was aware of the manufacturing activity inter alia using the zero zero machine for the process of calendering, as such, demand cannot be raised by invoking the extended period of limitation on the ground that suppression of facts is a factor to be determined with reference to the same set of facts already in the knowledge of department on annual basis. On the issue of time-barring aspect in support of his contention he relied upon the following decisions :- 1. Vishwa Industrial Works, Bombay v. Collector of Central Excise, Bombay -1987 (31) E.L.T. 976 (Tribunal). 2. Upper Doab Sugar Mills v. Collector of Central Excise, Meerut -1987 (32) E.L.T. 124 (Tribunal). 3. Andhra Pradesh State Electricity Board v. Collector of Central Excise, Hyderabad -1988 (35) E.L.T. 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of calendering with the help of remaining unit, viz., rubber belt of zero zero machine and, accordingly, they are not entitled for exemption in terms of Notification. She said that it is nobody s case that process of double calendering has been done but the process of shrinkage or effect of shrink-proof has taken place with the functioning of the rubber belt in zero zero machinery even without stenter in addition to calendering. Hence, benefit of exemption cannot be extended as per proviso to the Notification No. 253/82. She said that terms pre-shrunk, shrinkage, anti-shrink, shrink-proof, residuary shrink and compressive shrinkage are synonymous and used in the same sense. She referred to the following technical literature which were already taken on record to consider the issues involved in these cases as per Order No. M/40/92-D, dated 20-2-1992. 1. Technical opinion of Ahmedabad Textile Industry s Research Association. 2. Chapter IX from An Introduction to Textile Finishing by J.T. Marsh, Chapman Hall Ltd., 1953 P. 240-253. 3. Part of a Chapter from A Hand Book of Textile Finishing by A.J. Hall, The National Trade Press Ltd., 1957 P. 189-193. 4. Japan Textile Proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in treated fabric either cotton or polyester blended, the width of which is already adjusted may not require the use of stenter. Some of the fabric varieties are passed through compressive shrinking range to impart certain feel. In such cases also stentering is not done." She contended that since stentering is not necessary to achieve the shrinkage as compressive shrinkage has been done with the help of rubber belt or blanket, the Collector was justified in denying the benefit of exemption in all the cases and important aspect was not considered by the Collector, Ahmedabad in the case of M/s. Prakash Calender Factory while allowing the appeal. She submitted that she is not going to argue on the issue whether amended Notification No. 213/88 is a clarificatory or directory in nature or whether it has got a retrospective aspect, since in no way it alters the position in all these cases. The Notification refers to inclusion of stentering for the purpose of denying exemption but with or without stentering it will not change the position in these cases as stentering was already taken note of by the Notification No. 253/82 as it was clearly mentioned therein and the issue in these cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in 1991 (53) E.L.T. 358 (Tri.) = 1992 (38) E.C.R. 441 wherein it was held that damping is not manufacture as it is a part of calendering. Calendering with plain rollers is not manufacture following the ratio of the Supreme Court in the cases of Mafatlal Spinning Co. Ltd., Siddeshwari Cotton Mills. 16. Shri Dinkar while adopting the arguments of Shri Laxmikumaran submitted that there was no charge of shrinkage in the show cause notice issued to his appellants M/s. Omkar Textile Mills and on the other hand it was charged that process of double calendering has been done as per order passed by the Adjudicating Authority. 17. Shri Kapoor also adopted the arguments of Shri Laxmikumaran and further said that process of shrinkage was neither liable to duty nor shrinkage has been done independent of calendering to deny the benefit of exemption. 18. We have carefully considered the submissions made by both sides and perused the records including the technical write up filed by the respective sides. The main contention of the parties in all these cases is that they were not engaged in shrink-proofing process on cotton fabrics but they were simply engaged in calendering process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government of India in the Ministry of Finance (Department of Revenue and Insurance) Nos. 80/76-Central Excises and 122/76-Central Excises, dated the 16th March, 1976, the Central Government hereby exempts cotton fabrics, falling under Chapter 52 of the Schedule to Central Excise Tariff Act, 1985 (5 of 1986), when subjected to any process or processes specified in the Table hereto annexed, from the whole of the duty of excise leviable thereon both under the Central Excises and Salt Act, 1944 (1 of 1944) and the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957): Provided that no such exemption shall apply - (i) Omitted; (ii) if cotton fabrics, falling under Chapter 52 of the said Schedule, are subjected to any process or processes specified in the said Table within the same factory in which they have been subjected to any process other than the processes specified in the said Table. THE TABLE 1. Calendering (other than calendering with grooved rollers). 2. Flanellete raising. 3. Stentering. 4. Damping on grey and bleached sorts. 5. Back-filling on grey and bleached sorts. 6. Singeing, that is to say, burning away of knots and loo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compressive shrinkage is a standardized method which reduces the residual shrinkage in cotton and linen to not more than 1 per cent. Dictionary of Textile terms defines that shrinkage control is a compressive shrinkage of a cotton fabric holds residual shrinkage to less than 1% in either width or length. In a way percentage of residual shrinkage determines whether it is a shrink-proof or not. The Board s circular F. No. 15/110/64-CX. 1, dated 27-4-1964 confirms this view wherein it was observed that the Board, after carefully considering the matter, are of the view that the residual shrinkage in a properly pre-shrunk cotton fabric should not exceed 1.5 per cent including tolerance in either the warpwise or weftwise direction. We do not find that such detailed investigation has been done in these cases to arrive at the percentage of residual shrinkage in the fabrics in question whether they have got the effect of shrinkage proof. On the other hand it was brought to our notice by the parties that samples of fabrics in the cases of two units, viz., Shri Balaji Felt, Pali and M/s. Mangal Felt Finishing Works have gone under such test and results of analysis of samples revealed that shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew that the presence of stenter in these type of machinery employed in these cases is necessary to determine the width and dimensional stability. Since sufficient evidence was not place on record to show the compressive shrink was done with the help of zero zero machine and since we are not convinced that Rubber belt acted as a shrink proof in the process of shrinkage, we conclude that fabrics were not processed under shrink-proof. When once we come to the conclusion that fabrics were no subjected to process of shrink-proof, we do not find any justification to deny the benefit in terms of Notification even though process of shrinkage has taken place as incidental to the process of calendering. Since parties are succeeding on the issue of eligibility of exemption in terms of Notification No. 80/76 or under 253/82, we do not feel it necessary to go into other issues raised by both sides. 19. All these appeals are disposed of in the above terms. 20. [Assent per : K. S. Venkataramani, Member (T)]. - While respectfully agreeing with the conclusions of the Hon ble Member Judicial it may badded that the Explanation to the Notification No. 253/82 inserted by amending Notification No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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