ORDER
G.N. Srinivasan, Member (J)
1. This is an appeal filed by the department against the decision of the Collector of Central Excise (Appeals), Mumbai made in Order No. ADM-310/91, dated 31-7-1991 whereunder he held that the respondent’s contention that process of dyeing and heat setting would not amount to process of manufacture and that the product would come under Tariff Heading 56.03.
2. The respondent had filed a Classification List No. 7/89-90, dated 28-8-1989 for non-woven fabrics subjected to process of dyeing and heat setting and claimed the same as non-chargeable to duty as the process was done by them did not amount to manufacture within the meaning of Section 2(f) of the Central Excises & Salt Act. It was also argued by the respondent that such a process would not amount to manufacture within the meaning of Chapter 56 of the CETA. The Assistant Collector did not agree with it because it was not necessary that every process should be defined under chapter notes as process of manufacture as has done in the case of Chapters 52,54,55 etc. Therefore, he approved the classification list holding that the goods come within Chapter Heading 5603.00 chargeable to duty, 12% basic excise duty and special excise duty at 5%. An appeal was filed by the appellant and the Collector (Appeals) following the explanatory notes under Heading 5603 held that if, therefore, duty liability was discharged at bonding stage, no further duty would be attracted on non-woven fabrics when subjected to these processes. He also held that the bonded non-woven even after being subjected to the process and of dyeing and heat setting continued to remain under the same heading under which it has discharged the duty liability and hence cannot be subjected to the duty second time as this would amount to double taxation. Hence the present appeal.
3. It is argued by learned DR Shri K.M. Mondal that it is not necessary that every process should be defined under chapter notes as process of manufacture as has mentioned in case of Chapters 52,54 and 56 where certain processes have been declared to be process of manufacture. But it does not mean, it is argued that those chapters where no such definitions have been given, no process shall amount to manufacture. He also relies on the judgment of the Supreme Court in Ujagar Prints v. Union of India -1988 (38) E.L.T. 535 for the proposition that the generally accepted test would be to ascertain whether there was manufacture. Where a change or a series of changes result in the feasible change so commercially, it can no longer be regarded as original commodity, but is, instead recognized as distinct, and new article, this should be kept in mind. He also relies on the judgment of the Supreme Court in case of Empire Industries v. U.O.I. -1985 (20) E.L.T. 179 for the proposition that to constitute a manufacture it was not necessary that one should absolutely make out a new thing because it was well-settled that one cannot absolutely make a thing by hand in the sense that nobody can create a matter by hand. It is a transformation of the matter into some thing else and that something else was only questioned of degree, whether that something else was different commercial commodity having its distinct, character, use and name and commercially known as such, it has to be kept in mind. It is argued that the product before process is known different in commercial parlance after dyeing and heating stating they are known as processed fabrics, therefore the order of the appellate authority is wrong.
4. We have heard the representative of the respondent.
5. We have considered the rival submissions. The question is regarding classification of non-woven fabrics and its dutiability when it was dyed and heat set. The Assistant Collector in the order-in-original has held as follows :-
“I do not agree with the views of the party because it is not necessary that every process should be defined under chapter notes as process of manufacture as is done in the case of Chapters 52,54, 55 where certain processes have been declared to be processes of manufacture. But it does not mean that those chapters where no such definitions have been given no process shall amount to manufacture because before introduction of Central Excise Tariff Act, 1985 there were no Section and chapter notes. We have to read the manufacture as it appears in Section 2(f) of Central Excises and Salt Act. It has been held by the Supreme Court in the DCM case that manufacture .means a process which changes the name, character or use of the product. In the instant case the process of dyeing and heat setting not only changes colour of the fabric but ‘ also changes the constitution of non-woven. As mentioned in the show cause notice both the products before and after processing are differently known in the commercial parlance. It is not necessary that in the same Tariff heading there cannot be manufacture. The Collector (Appeals) in the impugned order has held as follows :-
A perusal of the tariff structure shows that sub-heading 5603.00 of the Central Excise Tariff Schedule, 1985 covers non-wevens, whether or not impregnated, coated, covered or laminated. This means that all non-wovens whether plain or processed are covered under the sub-heading according to HSN Explanatory Note under Heading 56.03 appearing on page 775, non-wovens can be produced in various ways and production can be conveniently divided into three stages, web formation, bonding and finishing. Dyeing, printing, impregnation coating or lamination are listed as finishing processes and even after these processes, the non-wovens remain as non-wovens. If therefore, duty liability is discharged at Bonding stage, no further duty would be attracted on non-wovens when subjected to these processes. Further, according to Chapter Note 3 of Chapter 56 Heading 56.03 covers non-wovens, impregnated, coated, covered or laminated with plastics or rubber whatever the nature of these materials. Thus, even processes like impregnation, covering or lamination do not amount to ‘manufacture’ as per the said Chapter Note. It has not been disputed by the Assistant Collector that the non-wovens which are subjected to heat setting and dyeing, have not discharged the duty liability. The bonded non-woven even after being subjected to the processes of dyeing and heat setting continue to remain under same Heading under which it has discharged the duty liability and hence cannot be subjected to that duty second time, since this would amount to double taxation.”
5. In the Empire Industries case 1985 (20) E.L.T. 179 the Supreme Court was considering dyeing, printing etc., as mentioned in Item 19 of the Tariff item. Held at para 33 that in the light of several decisions and construction of the expression that the process and bleaching, dyeing and printing also being manufacturing process. They also upheld decision by the Bombay High Court reported in 1983 (14) E.L.T. 1736.
6. In the subsequent judgment of the Supreme Court in Ujagar Prints v. Union of India -1988 (38) E.L.T. 535 at para 16 thereof at page 548 it has been held as follows :-
“On consideration of the matter we are persuaded to think that the view taken in the Empire Industries case that ‘Grey-fabric’ after they undergo the various processes of bleaching, dyeing, sizing and printing, finishing etc. emerges as a Paragraph number is as per certified copy. commercially different commodity with its own price-structure, custom and other commercial incidents and that there was in that sense a ‘manufacture’ within the meaning of Section 2(f), even as unamended, is an eminently plausible view and is not shown to suffer from any fallacy.”
Therefore we are of the view that the view taken by the Collector (Appeals) is wrong.
7. One more aspect is required to be dealt with about double duty. The Assistant Collector has held that process of dyeing and heat setting changes the colour of the fabric and also the constitution of non-woven. It has further emphasised the fact that the products before or after process are known differently in the commercial parlance. We do not find any difficulty to agree with the decision of the Assistant Collector. When two different commodities come there can be levy of tax at each stage. Hence, we do not agree with the view of the Collector (Appeals), but agree with the view of the Assistant Collector and accordingly allow the appeal.
8. Appeal allowed.