| SooperKanoon Citation | sooperkanoon.com/12955 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Mar-02-1998 |
| Reported in | (1998)(102)ELT108TriDel |
| Appellant | Polyfab Packaging Industries |
| Respondent | Collr. of C. Ex. |
2. The appellants were engaged in the manufacture of High Density Polythylene Bags on Circular Looms. They claimed the benefit of exemption Notification No. 223/86-C.E., dated 3-4-1986, as amended. It was their contention that no bag/sack could be manufactured on circular loom and that the fabric as coming out of the circular loom was not sacks. It was their contention that their case was not covered by the proviso to that notification and as such they were eligible for the benefit of Notification No. 223/86-C.E. The appellate authority after referring to the provisions of the exemption notification held that the sacks manufactured by the appellants had been manufactured on circular looms, thus they were not entitled to the benefit of Notification No.223/86-C.E., dated 3-4-1986, as amended.
3. We have heard Shri D.N. Mehta, Advocate, for the appellants and Shri Satnam Singh, SDR, for the respondents/Revenue.
4. Shri D.N. Mehta, Advocate, submitted that while they were engaged in the manufacture of sacks, the sacks as such were required to be stitched on one side after the fabric is taken off the loom, the circular loom. He pleaded that there was a Board's circular and that according to this circular the fabric produced on circular loom was just a fabric and not the sack. It was his plea that the Board's circular was binding on the Departmental Officers. He also submitted that the explanation added to the said notification was added in the year 1980 and will have no retrospective effect. Reference was also made to the Tribunal's decision in the case of Rajasthan Synthetic Industries Ltd. v. Collector of Central Excise -1989 (42) E.L.T. 24 (Tribunal).
5. In reply, Shri Satnam Singh, SDR, referred to the discussion in the order-in-original and the order-in-appeal, and submitted that the Board's circular was on a different issue and that the exemption notification was clear and that it was not disputed that the fabric for the sacks had been made on the circular looms. He pleaded for the rejection of all the three appeals.
6. We have carefully considered the matter. The issue for our consideration is, whether the goods in dispute were eligible for the benefit of exemption Notification No. 223/86-C.E, as in force during the relevant time. The Notification No. 223/86-C.E., dated 3-4-1986, as amended by Notification No. 453/86-C.E., dated 20-11-1986, and Notification No. 3/87-C.E., dated 7-1-1987, is extracted below : Exemption to woven sacks of polymers of ethylene or propylene or a combination thereof and falling in Chapter 46 or 63. - In exercise of the powers conferred by Sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts woven sacks of polymers of ethylene or propylene or a combination thereof, falling under Heading No. 46.01 or 63.01 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from the whole of the duty of excise leviable thereon which is specified in the said Schedule: Provided that nothing contained in this notification shall apply if such woven sacks of polymers of ethylene or propylene or, as the case may be, a combination thereof, are manufactured on circular looms.
[Notification No. 223/86-C.E., dated 3-4-1986 as amended by Notifications No. 453/86-C.E., dated 20-11-1986 and No. 3/87-C.E., dated 7-1-1987.] 7. It is seen from this exemption notification that the benefit of exemption was not applicable to the woven sacks of polymers of ethylene or propylene which are manufactured on circular looms. There is no dispute that the goods as cleared were woven sacks and were made of polymers of ethylene or propylene. The learned Advocate had contended that the woven sack as such had not been manufactured on circular looms and what was really manufactured was the fabric and that from such fabric after being taken off the loom by stitching sack had come into existence. We consider that when the fabric out of which the woven sack had been manufactured was manufactured on circular looms, the goods were covered by the proviso to the said notification.
8. Reference has been made to the Board's circular which had been extracted by the Assistant Collector of Central Excise, Division III, Surat, in his order-in-original dated 28-7-1989. The circular is extracted below : HOPE Tapes of width not exceeding 5 mm are classifiable under sub-heading No. 5406.90 and such tapes of width exceeding 5 mm are classifiable under Chapter 39. - Madurai Collectorate Trade Notice No. 132/86, dated 22-11-1986.
HDPE/PP woven fabrics in circular form. - Most of the fabrics used for manufacture of hosiery items are in tubular form and such fabrics are manufactured in circular looms. They are not flat in nature still they are known as fabrics. As per Textile Terms and Definitions by the Manchester Textile Institute a loom is a machine for producing cloth by weaving and a circular loom is a loom on which shuttle travel simultaneously on a circular path. So out of circular loom only cloth or fabric can be manufactured and not a sack. The said product out of the circular loom has not attained the essential characteristics of a sack. In common parlance a sack will refer to a product which is closed on three sides. The packing is done through the opening side and after sack is filled it is stitched at the opening side. But the product coming out of the said circular loom is open on both the sides and as such it is not fit for any packing. In a technical sense the sacks are only containers made out of textile or other materials. The essential characteristics of container is the capability to contain anything but the so called giant size sack is not capable of containing anything. So it does not fulfill the essential characteristics as in the rules of interpretation 2(a). For the purpose of Chapter 63, the 'made up' expression is defined in Note 5 of Section XI. The tubular fabrics or cut pieces thereof do not conform to the said definition of made up article and hence do not fall under heading 63.01.
Accordingly tubular HDPE woven fabrics or cut-pieces thereof, are correctly classifiable under heading 54.08 of Central Excise Tariff - Based on C.B.E. & C. Circular No. 28/88-CX. 1, dated 18-11-1988.
9. It is seen from this circular that it was in relation to the hosiery items and not to the woven sacks. Woven sacks are a different commodity than hosiery items. The issue for consideration was, whether the tubular fabrics or cut-pieces conform to the definition of made-up article for the purposes of Heading No. 63.01. The Board's clarification was to the effect that the tubular HDPE woven fabrics or cut-pieces thereof were correctly classifiable under Heading No. 54.08 of the Central Excise Tariff. We find that in these proceedings the classification under Heading No. 63.01 is not in dispute. Both the sides had agreed that the goods were classifiable under Heading No.63.01 of the Tariff and the only dispute is relating to the proviso in the exemption notification, the notification already extracted above.
10. We find that the matter is already covered by the Tribunal's decision in the case of Shrifabs (I) Pvt. Ltd., Vadodam v. Collector of Central Excise, Vadodam -1996 (84) E.L.T. 261 (Tribunal), wherein the Tribunal had held that the woven sack being manufactured by the appellants in that case out of fabrics woven on circular looms were not eligible for the benefit of Notification No. 223/86-C.E., as amended by Notification No. 3/87-C.E., dated 7-1-1987. Para 6 from that decision is extracted below : 6. Considering the submissions and going through three different Notifications referred to by the learned Advocate, Notification No. 223/86 grants exemption to all Woven Sacks from duty and vide Notification No. 253/86, the scope of applicability was restricted only to such sacks which were manufactured on flat knitting looms.
Vide Notification No. 3/87, the scope of exemption appears to have been extended but specifically excluding the availability of exemption to such sacks which were manufactured on circular looms.
Presumably because some difficulty was experienced in administering the same Notification, a Notification seems to have been issued specifying as to what is meant by sacks woven on circular looms. The same Notification No. 57/90 clearly appears to be the one of a clarificatory nature and cannot be treated as altering the situation which existed earlier. Considering the same notification as a clarificatory one, the appellant's claim for refund obviously gets negatived as they are manufacturing sacks out of the fabrics woven on circular looms. From this view point, therefore, the claim for refund cannot be entertained and has been rightly rejected by the authorities below. Therefore, the appeal does not merits consideration and is rejected.
11. The learned Advocate had submitted that the Notification No.223/86-C.E. was amended by Notification No. 57/90-C.E., dated 20-3-1990 and that the period involved in these proceedings was prior to this amendment. The amendment inserted the following proviso after the explanation in the notification, referred to above: "Explanation : For the purposes of this notification woven sacks would be deemed to have been woven on circular looms if such sacks are made out of fabrics woven on circular looms." 12. We consider that even without the aid of this explanation the woven sacks manufactured on circular looms were outside the purview of the exemption and as discussed by the adjudicating authority the circular looms produce the fabrics and that from such fabrics the woven sacks are made.
In these circumstances, it could not be said that by stitching on one side of the circular fabric as coming out of the circular loom, the sack as such was not produced on the circular loom. The expression used in the proviso is 'manufactured on circular looms'. If the interpretation given by the appellants is accepted, then the proviso will become meaningless. The provisions have to be interpreted in a harmonious manner and have to be given effect to the purpose sought to be achieved. As on the circular looms circular fabrics are produced and simply by stitching on one side it could not be said that a different product had come into existence, thus, even without the aid of the explanation which in any case appears to be clarificatory in nature, we consider that the goods in question were not eligible for the benefit of the said exemption notification.
13. The learned Advocate had also referred that there was discrimination as other manufacturers of similar goods were not paying any excise duty. It may not be proper for us to deal with the matters which are not before us, but on a harmonious and reasonable construction of the proviso to Notification No. 223/86-C.E., we consider that the woven sacks whose circular fabric is made on circular looms was out of the purview of the said exemption.
14. In view of the above discussion, we do not find any infirmity in the view taken by the Collector of Central Excise (Appeals) in all these three matters. As a result, all these three appeals are rejected.