Judgment:
1. Arguing for the appellants; Shri G. Shivadas, learned Advocate submitted that two issues are involved in the instant case. He submitted that to what extent duty is to be paid in respect of the spun yarn in terms of Rule 49A and whether value of 'Dharmada' is to be added to the finished products, i.e., fabrics. He submitted that in respect of the cellulosic spun yarn as in the instant case, duty is payable at the appropriate duty plus one and a half per cent of the duty payable on such cellulosic spun yarn. He referred to the relevant Rule 49A(1) and (2) which reads as under :- "(1) When the cotton fabrics are cleared grey (unprocessed), the yarn duty payable shall be - (a) the appropriate duty payable on such cellulosic spun yarn or cotton yarn, or both, as the case may be; plus (b) one and a half per cent of the duty payable on such cellulosic spun yarn or cotton yarn, or both, as the case may be, by way of interest on the amount of yarn duty; (2) When the cotton fabrics are cleared after processing, the yarn duty payable shall be - (a) the appropriate duty payable on such cellulosic spun yarn, or cotton yarn, or both, the case may be; plus (b) three per cent of the duty payable on such cellulosic spun yarn, or cotton yarn, or both, as the case may be, by way of interest on the amount of yarn duty." According to the department, since the process of shearing amounts to processing and that processing is covered under Rule 49A(2) of the Central Excise Rules, accordingly, the party is required to pay appropriate duty plus 3% of the duty payable on such cellulosic spun yarn. It was contended by Shri G. Shivadas that process of shearing does not amount to processing and this issue has been considered by the Supreme Court in the case of Mafatlal Fine Spinning & Mfg. Co. Ltd. v.Collector of Central Excise, reported in 1989 (40) E.L.T. 218 (S.C.) wherein it was held that fabrics continue to be unprocessed (grey) under Rule 49A even after calendering and shearing. He submitted that cropping and shearing is a composite word and referred to Fairchild's Dictionary of Textiles wherein word Cropping has been defined as a finishing process of shearing. He submitted that if his contention to Rule 49A(1) is accepted, relief in respect of 'Dharmada' is not of much consequence as observed by the Adjudicating Authority in the order.
2. Shri P. Das, learned SDR appearing for the Revenue submitted that he has nothing to say in view of the decision of the Supreme Court that fabrics continue to be unprocessed under Rule 49A even after shearing.
He submitted that as regards 'Dharmada', the value of finished products increases to that extent since 'Dharmada' is to be added.
3. We have carefully considered the submissions made by both the sides.
We find that issue involved with reference to Rule 49A(1) has been covered by the decision of the Supreme Court in the case referred to above. In that case, it was specifically held that fabrics continue to be unprocessed under Rule 49A even after calendering and shearing. In terms of Rule 49A(1) it is clear that in respect of unprocessed fabrics yarn duty is payable at the appropriate duty and 1 1/2% of the duty payable on such cellulosic spun yarn. In the facts and circumstances of the case, we accept the plea of the appellants that item in question (yarn) is liable to duty at the appropriate duty at the relevant time in addition to 1 1/2% of the duty. In the facts and circumstances of the case, we are not inclined to go into the issue with reference to 'Dharmada' since it is of no consequence as it was observed by the Adjudicating Authority in the impugned order. Accordingly, the appeal is disposed of in the above terms.