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Aapul Textile & Industries Pvt. Ltd., Sudarshan R Kedia Versus Commissioner of Central Excise

Manufacture - garnetting of synthetic filament/fibre waste - Held that: - as regards the processing of carding and garneting of textile waste, this Tribunal in the case of Collector of Central Excise v. Amritsar Swadeshi Woollen Mills [1989 (6) TMI 122 - CEGAT, NEW DELHI] has clearly held that the process does not amount to manufacture. - Prior to insertion of Chapter Note 3 it was clearly held in Amritsar Swadeshi Woollen Mills [1989 (6) TMI 122 - CEGAT, NEW DELHI] that garneting is not amo .....

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- Shri Ramesh Nair, Member (Judicial) And Shri C J Mathew, Member (Technical) Shri J.C. Patel, with Shri D.H. Nadkarni, Advocates for the appellant Shri Ajay Kumar, Jt. Commissioner (AR) for the respondent ORDER Per Ramesh Nair The appellants are engaged in the garnetting of synthetic filament/fibre waste. Excise duty demand was confirmed on the ground that garneting process of waste amounts to manufacture in accordance with Chapter Note 3 of Chapter 55 of Central Excise Tariff Act, 1985. It is .....

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the appellant filed these appeals. 2. Shri J.C.Patel, Learned Counsel for the appellant along with Shri D.H. Nadkarni, Advocate appearing on behalf of the appellant submits that the appellant is engaged in the process of garneting of the synthetic waste. He submits that with regard to their classification declaration filed under Rule 173B the jurisdictional Range Superintendent vide its letter dated 02/12/1999 clarified that garneting/carding does not amount to manufacture as per CBEC Circular .....

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I Division wherein, though the goods were seized under panchanama dated 15/09/1994 but the same was vacated and the goods along with documents were returned. He submits that with this action of the department it was accepted by the department that garneting and carding process does not amount to manufacture. He further submits that as per Chapter Note 3 to Chapter 55 which was relied upon in the show cause notice, it only indicates regarding the classification of the goods in question whereas in .....

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as the process does not involve the emergence of a different commercial commodity with characteristics different from the raw material. He also relied upon the following judgments: i. Techno Associates Industries Pvt Ltd v. Commissioner of Central Excise, Indore 1998 (99) ELT 389 (Tribunal); ii. Bombay Fibre Industries Ltd v. Collector of Central Excise 1996 (83) ELT (SC) iii. Gulf Oil Corporation Ltd v. Commissioner of Central Excise 2005 (183) ELT 40 iv. Shyam Oil Cake Ltd v. Commissioner of .....

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ce. This also shows that even the department also not pursuing the demand of duty on similarly placed manufacturers who are engaged in garneting/carding of waste. It is his submission that both the show cause notices involved in the present appeals have been issued beyond the normal period by invoking the proviso to Section 11A. However, from the facts it is clear that even the department was very much aware of the activity of garneting and carding of the appellants. There were chain of correspo .....

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ector of Central Excise, A.P. 2006 (197) ELT 465 (SC). 4. He further submits that on identical issue, the very same Commissioner, while deciding the appeal in the case of M/s Blumount Fibres Pvt Ltd, Badlapur has dropped the demand. However, in the present case, in the impugned order, the Commissioner, even after considering the said fact of Bluemount Fibres Pvt Ltd distinguished the same on the basis, that order was passed mainly on the Board s Circular 91/2/95-CX dated 13/01/1995 and Supreme C .....

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rther submits that as per Note 3 to Chapter 55, garneting amounts to manufacture and as per this Tribunal s decision in the case of Geetanjali Woolens Pvt Ltd v. Commissioner of Customs & Central Excise, Vadodara II 2007 (218) ELT 152 (Tri.-Ahmd.). He further submits that the manufacturing process of carding and garneting of the waste was not informed to the department by the appellant and thus this fact was suppressed by the appellant from the department. Therefore, the extended period of l .....

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d SDR and the technical literature placed before us. The process in respect of which duty is demanded is garnetting which is defined in Indian Standard Glossary of Textile Terms Natural fibres - 232 -1967 as follows:- The process of recovering fibres from hard twisted thread waste, rags, clip pings, etc. especially of wool. The object is to thoroughly break up the material and return it to a fluffy fibrous condition so that it may be re-used in blends or in some cases alone. It is clear from thi .....

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inning process as the tangled mass of threads are likely to damage the carding machine. Therefore, the goods i.e. waste after garnetting are not excisable. 7. From the above decision it was clearly held that the goods i.e. waste after garneting is not excisable as it does not involve emergence of different commercial commodity with characteristics different from the raw material. Despite the above judgment, Revenue has heavily relied upon the Chapter Note 3 which was inserted in Chapter 55 of Ce .....

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that the Chapter Note is for the purpose of classification of the waste of synthetic staple fibres but it does not declare that the process of garneting/carding amount to manufacture , unlike certain process given in Chapter Note 4, which is reproduced below: 4. In relation to goods falling under heading 5512 or 5513 or 5514 or 5515, bleaching, dyeing, printing, shrink-proofing, tentering, heat-setting, crease-resistant processing, any other like processing and any combination of such processes .....

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e that does not mean that the process of garneting/carding will fall under the activity of manufacture 10. We have gone through the various judgments cited by the Learned Counsel. In the case of Techno Associates Industries Ltd v. Collector of Central Excise (supra) this Tribunal has clearly held that garneting is not a process of manufacture. Similarly, in the case of Bombay Fibre Industries Ltd. (supra) the Hon ble Supreme Court, taking note of Board s Circular No. 40/2/95-CS dated 13/01/1995 .....

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tion of usable materials/fibres from non-usable short of fibres and dirt material does not amount to manufacture. In a similar case of C.T. Cotton yarn Ltd (supra) this Tribunal after remand by the Supreme Court, conclusively held that carding and combing of ginned cotton does not amount to manufacture. Regarding the issue whether the Chapter Note 3 given in Chapter 55 can be sufficient to hold that process of garneting/carding amounts to manufacture, we have gone through the judgment in the cas .....

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n of bulk explosives. The mobile van carries all ingredients to the mine site and at the mine site these ingredients are mixed in the forth compartment of the mobile van to become bulk explosive which is immediately delivered to the bore hole. We find substance in the submissions of the Appellants that only after mixing of the ingredients the bulk explosive comes into existence. The process of manufacture takes place only at mines and not in the factory. Note 2 to Section VI is in respect of cla .....

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s in the mines. Note 2 to Section VI does not provide that the process of carrying the materials separately will amount to manufacture in the factory itself. It has been held by the Supreme Court recently in the case of Shyam Oil Cake v. CCE, Jaipur - 2004 (174) E.L.T. 145 (S.C.) that merely setting out a process in the Tariff Entry would not be sufficient. If the process is indicated in the Tariff Entry, without specifying that the same amounts to manufacture, then the indication of the process .....

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nts would amount to manufacture. As actual manufacture has not taken place in the factory the benefit of Notification No. 63/95 cannot be denied merely because the goods were transported in a mobile van to the site and mixed together to get explosive in the mines. We, therefore, set aside the impugned Order and allow the appeal filed by the Appellants. 11. In the case of Shyam Oil Cake Ltd (supra) the Hon ble Supreme Court has observed that 23. It was submitted that the decision in Aman Marble I .....

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efinition, it is not necessary that only in the Section or Chapter Note it must be specified that a particular process amounts to manufacture. It may be open to so specify even in the Tariff Item. However, either in the Section or Chapter Note or in the Tariff Entry it must be specified that the process amounts to manufacture. Merely setting out a process in the Tariff Entry would not be sufficient. If the process is indicated in the Tariff Entry, without specifying that the same amounts to manu .....

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