TaxTMI 
TaxTMI 
2002 (9) TMI 487
X X X X Extracts X X X X
X X X X Extracts X X X X
.... additional duty exemption for various machines imported by the appellants in terms of Customs Notification No. 29/97, dated 1-4-97. The goods under question have been imported under EPCG scheme for export of textile garments including knitted garments. The authorities below have rejected claims of appellants and hence these appeals. 4. Shri S. Murugappan, learned Advocate assisted by Ms. Prameela Vishwanathan, learned Advocate appeared for the appellants and took us through EPCG scheme provisions as outlined in Chapter VI of the relevant import and export policies for the period 1997-2002 and also provisions of Customs Notifications No. 29/97 referred above, in particular the proviso to the above notification specified that when the goods imported are required for the manufacture of textile garments (including knit wear) they are eligible for exemption from payment of additional duties. They argued that in all these cases, various machines imported by appellants are required for manufacture of textile garments including knitted garments, and therefore, they will be eligible for exemption referred above. It was argued that in the light of this, the lower authorities, rejectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ments. Most of them are also having certificates of Apparel Export Promotion Council for exporting Readymade Garments/ knitted garments. (v) After import of these machines the appellants are using them in the manufacturing of garments and garments so manufactured were exported. Samples of shipping bills showing such exports with cross references to the relevant EPCG licences were submitted. The export of garments is spread over 5 years as per the licencing conditions and, therefore, the appellants have still time to comply with the conditions stipulated in the licences for export of knitted/textile garments. (vi) Therefore, the issue boils down to the interpretation of the expression used in the Notification, i.e. "goods required for the manufacture of ..... textiles garments (including knitwear)". The machines imported are required for manufacturing of textile garments (including knitted garments) and the benefit of exemption is available to the appellants. There is no definition of "manufacturing" or the expression "goods required for the manufacture " either in the notification or in the customs tariff. In the absence of such definitio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fted by one of the buyers of knitting garments from one of the appellants in the present case was filed. Based on the defects list, the manufacturer of the garments is to ensure that the final product made is free from the defects enumerated in the list. The defects referred in the list begin with the knitting operations and various stages of the production of the garments. (x) In the case of Rupa & Co. Ltd. v. Commissioner of Customs, Kolkatta reported in 2002 (143) E.L.T. 562 (T) = 2002 (81) ECC 520 (T), similar question of levy of additional duties in terms of the very same notification was examined. In this case the Hon'ble Tribunal observed that the interpretation that only machines which are used directly in the manufacturing of textile garments will be eligible for additional duty exemption is not correct. In the light of the above and under law the various machines imported by manufacturers are required for manufacturing of knitting garments. (xi) The Supreme Court in the judgment relating to J.K. Cotton case referred to (supra) has clearly laid down that where any particular process is so integrally connected with the ultimate pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....P.C.G. Scheme. In particular reference was made to the Textile Commissioner letter dated 23-2-99, Deptt. of Revenue letters dated 20-7-99, 7-12-99 and 22-2-2000. (vi) In the reference made to the book "Knitted Clothing Technology" the reference is with regard to production of garments starting with fabric. This book does not state that the first step is manufacturing of fabric and it only refers to use of fabric. (vii) Even in the case of Rupa & Co. referred to by the appellants it is noticed that the production of knitting garments started with the inspection and reversal of fabric. In case the fabric is already dyed or compacted then such machinery are not to be allowed additional duty exemption. (viii) Machineries for processing should not be allowed in respect of cases where the garments are manufactured on job work basis. 6. The learned D.R. has also submitted a written submission along with enclosures. In his re-joinder the learned Advocate appearing for the appellants submitted as under : (1) The classifications under the first schedule to the Central Excise Tariff Act, 1985 are not relevant in the prese....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of garments starts with the knitting fabric. The interpretation adopted by the ld. D.R. that this refers only to the use of fabric is incorrect. The process of knitting of the fabric is the first step in the production sequence. (7) In the case of Rupa & Co. (supra) the knitting machine was not under consideration but only machines for processing. Hence the Tribunal did not have occasion to give any ruling regarding the knitting machine. Hence no inference can be drawn from this decision that the production of garments will start only with fabric processing machines. (8) Notification 29/97, dated 1-4-97 was issued providing for exemption from payment of additional duty to all machines. By issue of Notification 71/97-Cus., dated 16-9-97, 10% additional duty was imposed. However, exemption was made available in respect of goods required for manufacturing of leather garments, textile garments including knit wear. The exemption from payment of additional duty was provided for these products for the reason that the manufacturers of these goods were not under Central Excise and, therefore, 10% additional duty will not be available as Modv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e garments does not occur and the garments do not go out of shape. The dyeing machines are required for dyeing of the fabric. These machines come with dryer. The knitted and dyed fabrics are dried using these machines. 9. We observe that in all these cases the licences have been issued for import of these machines for exporting textile/knitting garments. It is further noticed that the appellants have also SSI Certificates for manufacture of knitting garments though other goods are also within the scope of manufacture. To a specific query from the bench, learned D.R. has replied that the fact that the appellants are exporting garments is not in dispute. The appellants have also submitted sample copies of shipping bills showing export of knitted garments. It was further submitted that the appellants have to submit periodical statements to the licensing authorities showing the details of the machines imported; goods manufactured and exported and the extent of export obligation completed. On completion of export obligation the appellants have to submit the full details to the licensing authorities as well as customs authorities evidencing export of goods specified in the licences....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 11. In the case of Rajasthan State Chemical Works, cited supra, the Apex Court observed in Paragraphs 11 and 12 as follows : "(11) Manufacture implies a change but every change is not manufacture, yet every change of an article is the result of treatment, labour and manipulation. Naturally, manufacture is the end result of one or more processes through which the original commodities are made to pass. The nature and extent of processing may vary from one class to another. There may be several stages of processing, a different kind of processing at each stage. With each process suffered the original commodity experiences a change. Whenever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity. But it is only when the change or a series of changes take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. (12) Manufacture thus involves series of processes. Process in manufacture or in relation to manufactu....