ORDER
G.A. Brahma Deva, Member (J)
1. All these appeals involve common issues and, therefore, they are clubbed together and are being disposed of by this common order.
2. Whether the opponents had done the process of shrinking of cotton fabrics with the aid of machine known as ‘zero zero’ machine in the absence of attached ‘baby stenter’ and even if the process of shrinking of cotton fabrics has taken place as incidental to the main process of calendering, whether exemption can be denied in terms of exemption Notification No. 80/76 dated 16-3-1976 or under Notification No. 253/82-C.E., dated 8-11-1982 amended by Notification No. 213/88-C.E., dated 15-6-1988 for the relevant period in question, are the main points to be considered in all these appeals.
3. The above appeals were filed by the respective parties except Appeal No. E/2878/90-D in the case of Prakash Calender Factory -1992 (61) E.L.T. 81 (Tribunal) which was filed by the Department. Department also filed an appeal on the similar issue since Collector of Central Excise & Customs, Ahmedabad dropped the proceedings holding that an explanation was added to the Original Notification No. 253/82 by issue of Notification No. 213/88 dated 15-6-1988 was clarificatory in nature which takes retrospective effect and, accordingly, that assessees were eligible for the exemption. He also observed in the said order that no further investigation is carried by the Officers whether the said ‘zero zero’ machine, in fact, carries out process other than felt calendering. Whether any process carried on by it gives permanent type of effect like shrink proof. Remaining appeals were filed by the parties since the findings by the concerned Adjudicating Authorities were not in favour of the assessees by the respective impugned orders.
4. We have heard Shri R.S. Dinkar, Shri R.K. Kapoor and Shri V. Lakshmikumaran, learned Advocates for the respective parties and Department was duly represented by Smt. Vijay Zutshi, learned CDR.
5. It was contended on behalf of all the parties that ‘zero zero’ machine installed by them in their factory did not contain attachment known as ‘baby stenter’ which alone in their view was capable of shrinking the grey fabric and, therefore, the allegation made in the show cause notice as well as findings given by the authorities below which refers to such allegations that by employing the zero zero machine for the purpose of processing grey cotton fabrics, they had also undertaken the process of pre-shrinking the cotton fabrics, was without any factual basis. They submitted that zero zero machine is claimed to consist of five main parts mainly, (i) feeding section, (ii) damping unit, (iii) baby stenter, (iv) rubber belt unit and (v) felt calender. They relied on the literature issued by one of the manufacturers of zero zero machine namely M/s. Dhall Enterprise and Engineers (P) Ltd., Ahmedabad and the copy of the letter written by the manufacturers to the Deputy Director of Textile Commissioner’s Office, Kanpur detailing the function of the various units of the zero zero machine. It was contended that they have purchased the zero zero machine without a stenter attachment and that was portion of the machine which was capable of shrinking the fabric and that even if the chemical test of the samples of processed fabric showed that there had been shrinkage, this shrinkage had not been to the extent as advertised by the registered owners of the process known as ‘Sanforising’ processes. They have explained further that the machine can be used either for taking shrinkage in which case baby stenter is highly important, or fabrics can be processed without shrinkage but only for imparting feel and finish. The machine has been designed to process fabric to impart smoothness, finishing and shrinkage if desired and actual result regarding shrinkage percentage could be ascertained on subjecting the processed fabrics to wash test in a laboratory. They have also explained that the term zero zero machine used by them was apparently meant to signify the smooth feel and finish imparted to the fabrics without any shrinkage and the term ‘pre-shrunk’ meant that fabrics had been shrunk into their full potential while processing through the machine.
6. The next important point was raised by them that relevant exemption Notification issued under the Central Excise Rules, viz., 253/82-C.E., dated 8-11-1982 was amended by Notification No. 213/88-C.E., dated 15-6-1988 inserting ‘explanation’ clause. They explained that Notification No. 253/82-C.E. gave exemption to processed cotton fabrics subject to certain conditions and that one of the conditions stipulated was that if any process other than processes mentioned in the Notification were carried out in the same factory, then exemption was not available. Later on 15-6-1988 an ‘explanation’ clause by amending the notification wherein it was explained that process of calendering would include processing cotton fabrics with the aid of “Zero Zero” machine without stenter attachment and this explanation clause would have retrospective effect and consequently, even if ‘zero zero’ machine has been employed by them for processing cotton fabrics, they would be entitled to exemption as long as zero zero machine did not have stenter attachment.
7. Learned counsels appearing for the parties apart from addressing common arguments either on the point of law or on facts also raised some points which are particularly applicable to their respective cases.
8. Shri Dinkar appearing for the appellants in appeals at Serial Nos. 1 & 3 and respondent in appeal at Serial No. 4, submitted that period in the case of Omkar Textile Mills is covered by the Exemption Notification No. 80/76 dated 16-3-1976 and period in other two cases is covered by Notification No. 253/82 as Notification No. 80/76 was superseded by Notification No. 253/82 and further Notification No. 253/82 was amended with explanation as per Notification No. 213/88-C.E., dated 15-6-1988. Since only explanation was added in the subsequent notification and the amendment is only clarificatory in nature, it has got retrospective effect since it clarifies earlier Notification. He relied upon the decision of the Tribunal in the case of Super Cassettes Industries Ltd. v. Collector of Customs, reported in 1992 (58) E.L.T. 105 (Tribunal), wherein it was held, notification issued subsequent to the clearance of the goods is generally not applicable but to apply when such amendment is only clarificatory in nature. It was observed that it is not adding any fresh condition or in any other manner disturbing the object which the original notification seeks to achieve. What was implicit in the Original Notification 133/86 has been made explicit by the amending Notification and added the explanation to the previous Notification. He also referred to the decision of the Supreme Court in the cases of Keshavlal Jethalal Shah v. Mohanlal Bhagwandas and Anr., reported in AIR 1968 Supreme Court 1336 and Central Bank of India and Ors. v. Their Workmen etc., reported in AIR 1960 Supreme Court 12. He contended that process done on ‘Zero Zero’ machine was nothing but a process of calendering and process of manufacturing was not manufacturing process as it was held by the Supreme Court in the case of Siddeshwari Cotton Mills (P) Ltd., reported in 1989 (39) E.L.T. 498 (S.C.) observing that process must be which impart a change of a lasting character to the fabrics either the addition of some chemical in the fabrics or otherwise. And in view of that observation made by the Supreme Court no duty can be levied as no manufacturing process has taken place. He submitted that demand is not sustainable in the case of Omkar Textile Mills since the duty amount was not specified either in the show cause notice or in the order. Reliance was placed by him in the case of J.B.A. Printing Inks Ltd. v. Union of India and Ors., reported in 1980 (6) E.L.T. 121 (Bom.) and Davangere Cotton Mills Ltd. v. Chairman, C.B.E. & C., reported in 1991 (55) E.L.T. 295, in support of his contention.
9. Shri R.K. Kapoor, learned Advocate, while arguing for the appellants M/s. Jindal (India) Textile Mills, on the issue whether processing done on ‘zero zero’ machine is subject to any liability of excise duty under the provisions of Central Excises and Salt Act, submitted that no tax can be levied by the Collector except by authority of law as per Article 265 of the Constitution. He said that amendment to Section 2(f) of the Act, i.e., any other process in Section 2(f) does not cover process of zero zero machine. Any other process refers to the process which is incidental to the completion of the manufactured product. Since shrink-proofing is not the ultimate product as mentioned in Section 2(f) of the Act, no liability can be fixed on the assessee in the process of shrink-proofing. Further, there is no proof that process carried on with the help of zero zero machine has a shrink-proofing effect. He said that calendering, as such, is exempted and pre-shrunk is not included within the definition of manufacture. Pre-shrunk is not the same thing as shrink-proof and they were not synonymous as understood by the Collector. Notification No. 253/82 clearly exempts calendering and even exemption of calendering does not specifically exclude zero zero machine but exclude calendering done on grooved rollers. He said that process of shrinkage was not done either in place of calendering or subsequent to the process of calendering but shrinkage has taken place incidental to the process of calendering and, as such, exemption cannot be denied in terms of Notification No. 253/82-C.E. Notification should be viewed liberally, and the Department is not justified in denying the benefit.
10. Arguing for the appellants in the above appeals at Serial Nos. 5 to 13, Shri Lakshmikumaran submitted that the appellants were engaged in calendering process on a machine known as zero zero machine purchased from M/s. Dhall Enterprises & Engineers Pvt. Ltd., Ahmedabad. The machine purchased and installed by the appellants was without the baby stenter which is necessary for overfeeding cloth to rubber belt unit to achieve controlled shrinkage. Calendering is nothing but a process akin to ironing to impart feel, finish and luster to the cloth. This process of calendering is not a process of manufacture to attract any duty. Further Notification No. 253/82 dated 8-11-1982 has specifically excluded this process from the purview of dutiable processes. Process of calendering done on zero zero machine is nothing but a process of calendering and, as such, it was exempted from duty under Notification No. 253/82. He said that shrinkage is bound to occur at the stage of more than one process and it is natural and incidental in the process of calendering and what is held to be dutiable is the process of shrink-proofing and not shrinkage or controlled shrinkage. The Collector has failed to understand the basic fact that shrinkage and shrink-proof are different and distinct terms used in the textile technology. He referred to the Fairchild’s Dictionary of Textiles (VI Edition) at pages 502 & 554, to show that they are different terms which are described as under :-
(i) Residual Shrinkage. The per cent of shrinkage left in a fabric following application of a shrink resistant treatment, such as Sanforized, London shrunk. (ii) Shrinkage Control. A general term for limiting shrinkage of fabrics such as compressive shrinking or resin treatment, or chlorination of wool by wet or dry processes. (iii) Shrinkage. Reduction in length and/or width of material caused by certain treatments, especially washing. (iv) Shrinking. A variety of processes for shrinking fabrics with steam, cold or hot water before cutting up and making into garments, to avoid excessive shrinkage in the garments. (v) Shrinkproof. A term that should be applied only to a fabric whose residual shrinkage is zero but is applied erroneously to fabrics that shrink little. He said that results of analysis of samples of fabrics which had undergone zero zero process drawn from two units, namely, M/s. Balaji Felts, Pali and M/s. Mangal Felt Finishing Works, are as follows :- Name of the Unit Shrinkage in Warp Shrinkage in Weft ________________ _________________ _________________ M/s. Balaji Felt 3.2% 6.2% M/s. Mangal Felts 3.9% 6.6%
These results quite clearly show that shrinkage both in warp and weft is more than 1%. These samples were sent to the Chemical Examiner with the specific purpose of testing “Whether shrinkage proofing process have been done on the fabric or not”. The Chemical Examiner has communicated the extent of shrinkage and said that “Regarding whether shrinkage proof attention is invited to Board’s letter F. No. 15/110/64-C.E., dated 27-4-1964”. Shri Lakshmikumaran also referred to the reference of the Ministry of Finance (Department of Revenue) Notification No. 17/64 dated 1-3-1964 defining inter alia shrink proofed fabric for the purpose of assessment of Central Excise Duty wherein it observed that Board after carefully considering the matter are of the view that the residual shrinkage in a properly pre-shrunk cotton fabric should not exceed 1.5% including tolerance in either the warpwise or weftwise direction.
11. Next he contended that demand was barred by time since the Collector raised the demand by invoking the larger period in spite of the fact that entire facts were known to the department. As early as in 1985 the Assistant Collector of Central Excise, Jodhpur has decided this issue in his Order dated 13-8-1985 taking note of the fact that the cotton fabric is first imparted moisture and the same is passed through a thick rubber belt unit and also the opinion of the Central Excise Preventive Officers who registered the case that the rubber belt unit can impart shrink-proofing process to cotton fabrics. The Assistant Collector dropped the proceedings initiated against the four units including appellants M/s. Manmohan Industries holding that “I have carefully gone through the available records/literature about the machine installed in above four units and arrived at the conclusion that none of the unit are engaged in the shrink-proofing process on the fabric but they served as a fabric calender machine with rubber belt in place of woollen felt. I, therefore, drop the proceedings initiated against all the four units under Central Excsie laws.” Shri Lakshmikumaran said that Collector did not dispute the decision of the Assistant Collector nor same was reviewed. It has attained finality. This subject matter was further taken up in the Regional Advisory Committee of the Central Excise & Customs Collectorate, Jaipur held on 27-9-1985 presided by the Collector, Jaipur and he explained that the jurisdictional Asstt. Collector has already examined this issue and given his decision in such cases on the merits of each case. In view of the finding given by the Assistant Collector at the earliest point of time, the parties were under the bona fide impression that the fabrics processed on zero zero machine were fully exempted from payment of duty in terms of Notification No. 253/82. Hence non-filing of declaration for the subsequent year cannot be held to be suppression of facts for invoking the larger period of limitation. He said that since the Department was aware of the manufacturing activity inter alia using the zero zero machine for the process of calendering, as such, demand cannot be raised by invoking the extended period of limitation on the ground that suppression of facts is a factor to be determined with reference to the same set of facts already in the knowledge of department on annual basis. On the issue of time-barring aspect in support of his contention he relied upon the following decisions :-
1. Vishwa Industrial Works, Bombay v. Collector of Central Excise, Bombay – 1987 (31) E.L.T. 976 (Tribunal).
2. Upper Doab Sugar Mills v. Collector of Central Excise, Meerut -1987 (32) E.L.T. 124 (Tribunal).
3. Andhra Pradesh State Electricity Board v. Collector of Central Excise, Hyderabad -1988 (35) E.L.T. 199 (Tribunal).
4. Indian Oil Corporation v. Collector of C. Excise -1990 (48) E.L.T. 80 (Tri.).
12. Next he contended that Notification No. 253/82 clearly exempts process of calendering from the Central Excise Duty as well as Additional Duty and even otherwise process of calendering does not amount to process of manufacturing, as it was held by the Supreme Court in the case of Siddeshwari Cotton Mills (P) Ltd. [1989 (39) E.L.T. 498] as well as in Mafatlal Fine Spinning and Manufacturing Company Ltd. [1989 (40) E.L.T. 218 (S.C.)]. Further the said Notification clearly exempts that calendering other than calendering grooved rollers. Neither grooved rollers were used in the process of calender nor it is the case of the Department that grooved rollers were used in the process of calendering to deny the benefit of exemption. Calendering, as such, was done with the help of zero zero machine without stentering and also the stentering was also mentioned in the Notification and in view of the fact that shrinkage was natural and incidental to the main process of calendering and not the effect of shrinkage proof the benefit of exemption cannot be denied in terms of notification. Further in the amended notification dated 15-6-1988 mere an explanation has been added which is clarificatory or directory in nature since it clarifies the earlier notification which has got the retrospective effect and even on this ground the exemption cannot be denied.
13. Smt. Zutshi while countering the arguments submitted that Section 2(f) of the Act was substantially amended and amended Section is an inclusive definition which includes any process specified in Item No. 19-1 of the First Schedule or any other process incidental or ancillary to the completion of a manufactured product. Process of calendering other than calendering with grooved rollers is exempted from duty as per Notification No. 253/82 but the exemption is not applicable if the cotton fabrics were subjected to any process or processes specified in the Table in which they have been subjected to any process other than processes specified in the Table. She said that although it is an admitted fact that none of the assessees in these cases has used attached stenter in the installed zero zero machine for the purpose of process of calendering nevertheless process of shrinkage or pre-shrunk has been done in addition to process of calendering with the help of remaining unit, viz., rubber belt of zero zero machine and, accordingly, they are not entitled for exemption in terms of Notification. She said that it is nobody’s case that process of double calendering has been done but the process of shrinkage or effect of shrink-proof has taken place with the functioning of the rubber belt in zero zero machinery even without stenter in addition to calendering. Hence, benefit of exemption cannot be extended as per proviso to the Notification No. 253/82. She said that terms pre-shrunk, shrinkage, anti-shrink, shrink-proof, residuary shrink and compressive shrinkage are synonymous and used in the same sense. She referred to the following technical literature which were already taken on record to consider the issues involved in these cases as per Order No. M/40/92-D, dated 20-2-1992.
1. Technical opinion of Ahmedabad Textile Industry’s Research Association.
2. Chapter IX from ‘An Introduction to Textile Finishing’ by J.T. Marsh, Chapman & Hall Ltd., 1953 P. 240-253.
3. Part of a Chapter from ‘A Hand Book of Textile Finishing’ by A.J. Hall, The National Trade Press Ltd., 1957 P. 189-193.
4. Japan Textile Processing Machinery Guide, Japan Machinery Exporters Association P. 101.
5. Technical Leaflet Final Finishing ‘Special Felt Calender for Zero Finish’ Mather Greaves.
6. Dhall’s Precontrolled Compressing Shrinking Range – Technical Leaflet, P. 32-35.
7. Cluett Comprehensive Shrinking Machine P. 36-37.
During the course of the arguments she also referred to the Hand Book on Glossary of Textile Terms, Textiles : FIBER TO FABRIC, Fifth Edition, by Dr. Bernard P. Corbman, Encyclopedia of Textiles, Third Edition, by the Editors of American Fabrics & Fashions Magazine to explain the terms and particularly functioning of the rubber belt and stentering. She said that on seeing the manufacturer’s catalogue one can see that machine itself is called as ‘Pre-con-trolled compressure Shrinking Range’ and the function of the Rubber belt unit is to give shrinkage against Baby stenter which provides effective length of clip stenter. Sliding on rails with in position locking device. While drawing our attention to the technical write up, she said that Anti shrink fabric refers to pre-shrunk, Shrink Resistant, Stabilised fabric shrinkage control and compressure shrinkage as per Glossary of Textile Terms of Indian Standard as well as Western Technology on Textiles by giving same meaning that a fabric which has dimensional stability of ±1 per cent both in warpway and weftway. She read the passage from page 249 of Textile Finishing by J.T. Marsh that “In the Sanforizing process, shrinkage is achieved by passing the cotton fabric on to a moveable elastic felt blanket which is in a state of tension; when the tension on the blanket is released, it assumes a shortened condition, and the cotton fabric is forced to conform to this compression as it is held firmly in contact with the blanket by the drum of a modified Palmer machine’. She also drew our attention to the opinion given by ATIRA which reads as follows :-
“A Compressive shrinking range essentially consists of three operational units namely a dampening or moistening Chamber, a baby stenter and a thick rubber blanket over the cylinder roll. The third one (last one) essentially makes the fabric mechanically shrink. The purpose of the stenter is to present the fabric free of creases and in uniform width before it enters the shrinking unit.
By and large cotton fabrics are subjected to compressive shrinking. In the case of resin treated fabric either cotton or polyester blended, the width of which is already adjusted may not require the use of stenter. Some of the fabric varieties are passed through compressive shrinking range to impart certain feel. In such cases also stentering is not done.”
She contended that since stentering is not necessary to achieve the shrinkage as compressive shrinkage has been done with the help of rubber belt or blanket, the Collector was justified in denying the benefit of exemption in all the cases and important aspect was not considered by the Collector, Ah-medabad in the case of Prakash Calender Factory while allowing the appeal. She submitted that she is not going to argue on the issue whether amended Notification No. 213/88 is a clarificatory or directory in nature or whether it has got a retrospective aspect, since in no way it alters the position in all these cases. The Notification refers to inclusion of stentering for the purpose of denying exemption but with or without stentering it will not change the position in these cases as stentering was already taken note of by the Notification No. 253/82 as it was clearly mentioned therein and the issue in these cases refers to shrinkage which was done with the help of rubber belt.
14. On the issue of limitation, she said that Collector was justified in invoking the larger period since declaration and true information were not supplied by the assessees while claiming the exemption under relevant Notification.
15. In reply, Shri Laxmikumaran submitted that there was no charge in the show cause notice that process of shrink-proofing was done with the help of rubber belt and further no proper investigation has been done to prove that fabric has got an effect of shrink-proof. Show cause notice as well as order suffers from specific finding on this issue. The Collector has used the terms shrinkage and shrink-proofing freely in his order as if they are one and same. He said that shrink-proof is different from shrinkage and to have effect of shrink-proof, the part called ‘baby stenter’ was necessary part of the machine to get shrunk-proof and not an accessory as can be seen from the catalogue of Mfrs. M/s. Dhall Enterprises & Engineers. Opinion given by ATIRA to the learned Departmental Representative also speaks the distinction between Stenter and rubber blanket and necessity of stentering to have more effect of shrink-proof. The Chemical Examiner who has examined the unit Balaji Felt & M/s. Mangal Felt Finishing Works certified that shrinkage is more than 3% in warp and 6% in weft, whereas Board clarifies through its Circular that it should not exceed 1.5% including tolerance in either warpwise or weftwise direction. Japan Models referred to by the D.R., i.e., Japan Dyeing Co., which are having improved version of Rubber belt, woollen felt or rubber blanket which are capable of doing the function of effective proof shrinkage having more tolerance cannot be compared with the type of zero zero machine installed in these cases. He said that D.R. refers to Sanforised process connotes comprehensive shrinkage of the fabrics which ensured that the residual shrinkage after such sanforising was less than 1% and same has not been done in these cases. He said that the parties have done mere process of calendering with the help of zero zero machine in the absence of stentering and if shrinkage has taken place as part of the calendering, the exemption cannot be denied relying upon the ratio of the decision in the case of Bharatia Textiles, Bombay v. Collector of Central Excise, reported in 1991 (53) E.L.T. 358 (Tri.) wherein it was held that damping is not manufacture as it is a part of calendering. Calendering with plain rollers is not manufacture following the ratio of the Supreme Court in the cases of Mafatlal Spinning Co. Ltd., & Siddeshwari Cotton Mills.
16. Shri Dinkar while adopting the arguments of Shri Laxmikumaran submitted that there was no charge of shrinkage in the show cause notice issued to his appellants M/s. Omkar Textile Mills and on the other hand it was charged-that process of double calendering has been done as per order passed by the Adjudicating Authority.
17. Shri Kapoor also adopted the arguments of Shri Laxmikumaran and further said that process of shrinkage was neither liable to duty nor shrinkage has been done independent of calendering to deny the benefit of exemption.
18. We have carefully considered the submissions made by both sides and perused the records including the technical write up filed by the respective sides. The main contention of the parties in all these cases is that they were not engaged in shrink-proofing process on cotton fabrics but they were simply engaged in calendering process of cotton fabric with the help of zero zero machine in the absence of baby stenter. Baby Stenter was absolutely necessary to have the effect of shrink-proof and without baby stenter it is not possible to have shrinkage control as there will be lot of variations which cannot be tolerated. Mere shrinkage if any which has taken place in process of calendering is neither a manufacturing process nor is mentioned in the relevant tariff entry.
Item No. 19(1)(b), reads as under :-
Cotton Fabrics.
Cotton fabrics, subjected to the process of bleaching, mercerising, dyeing, printing, waterproofing, rubberising, shrink-proof, organdie processing or any other process or any two or more of these processes.”
We find that process of shrink-proofing was specified in the Tariff Item 19(1) of the First Schedule and amended Section 2(f) of the Act refers that it includes any process incidental or ancillary to the completion of a manufactured goods; and in relation to goods comprised in Item No. 19-I of the First Schedule includes bleaching, mercerising, dyeing, printing, water-proofing, rubberising, shrink-proofing, organdie processing or any other process of any one or more of these processes. We observe that process of calendering, as such, was not mentioned either in Section 2(f) of the Act or in the Tariff and mere process of calendering does not amount to manufacture as it was held by the Supreme Court in the case of Mafatlal Fine Spinning & Mfg. Co. Further Notification No. 253/82 exempts calendering other than calendering with grooved rollers subject to the proviso if the cotton fabrics are subjected to any process other than mentioned in the table denying the exemption. Further an amendment was brought to this notification by Notification No. 213/88-C.E., dated 16-8-1988 inserting an explanation that calendering shall include processing of cotton fabrics with the aid of zero zero machine without a stenter attachment. The relevant Notifications (253/82 and 213/88) are reproduced as under :-
“Exemption from basic and additional duty to cotton fabrics when subjected to certain specified processes. – In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, read with Sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), and in supersession of the notifications of the Government of India in the Ministry of Finance (Department of Revenue and Insurance) Nos. 80/76-Central Excises and 122/76-Central Excises, dated the 16th March, 1976, the Central Government hereby exempts cotton fabrics, falling under Chapter 52 of the Schedule to Central Excise Tariff Act, 1985 (5 of 1986), when subjected to any process or processes specified in the Table hereto annexed, from the whole of the duty of excise leviable thereon both under the Central Excises and Salt Act, 1944 (1 of 1944) and the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957):
Provided that no such exemption shall apply –
(i) Omitted; (ii) if cotton fabrics, falling under Chapter 52 of the said Schedule, are subjected to any process or processes specified in the said Table within the same factory in which they have been subjected to any process other than the processes specified in the said fable. THE TABLE 1. Calendering (other than calendering with grooved rollers). 2. Flanellete raising. 3. Stentering. 4. Damping on grey and bleached sorts. 5. Back-filling on grey and bleached sorts. 6. Singeing, that is to say, burning away of knots and loose ends on the fabrics. 7. Scouring, that is to say, removing yarn size and natural oil found in cotton. 8. Cropping or butta cutting. 9. Curing or heat setting. 10. Padding, that is to say, applying natural starch on one or both sides of the fabric. 11. Expanding. 12. Hydro-extraction with the aid of power, that is to say, mechanically extracting or mechanically squeezing out water from the fabric. (Notification No. 253/82-CE., dated 8-11-1982 as amended by Notifications No. 54/85-CE, dated 17-3-1985 and No. 79/86-CE, dated 10-2-1986)." NOTIFICATION : "No. 213/88-Central Excises. GSR. (E) In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby makes the following further amendment in the Notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 253/82-Central Excises, dated the 8th November, 1982, namely :- In the said notification, after the Table, the following explanation shall be inserted, namely :- "Explanation. - For the purpose of this notification, calendering shall include processing of cotton fabrics with the aid of zero-zero machine without a stenter attachment."
Admittedly, the parties have taken process of calendering on fabrics. It is not the case of the Department that they have used grooved rollers in the process of calendering but since zero zero machine was used for the purpose of calendering, the fabrics were not only calendered but the fabrics have got the effect of shrinkage even without stenter. Since the fabrics were subjected to other than process mentioned in the Table to the Notification No. 253/82, the benefit of exemption cannot be extended. Hence, the point revolves around whether the fabrics have got the effect of shrinkage proof to deny the benefit of exemption. Since we find the term shrink-proof in the Tariff Entry No. 19(1) of the First Schedule, we shall try to understand the meaning of shrink-proof as used in technical literature of Textiles placed before us. Although anti-shrink, pre-shrunk, shrink resistant, compressive shrinkage are used as synonymous as argued by the Departmental Representative meaning thereby refers to which has dimensional stability of ± 1 per cent both in warpway and weftway. Textiles : Fiber to Fabric, Fifth Edition by Dr. Bernard P. Corbman in which it was said that compressive shrinkage is a standardized method which reduces the residual shrinkage in cotton and linen to not more than 1 per cent. Dictionary of Textile terms defines that shrinkage control is a compressive shrinkage of a cotton fabric holds residual shrinkage to less than 1% in either width or length. In a way percentage of residual shrinkage determines whether it is a shrink-proof or not. The Board’s circular F. No. 15/110/64-CX. 1, dated 27-4-1964 confirms this view wherein it was observed that the Board, after carefully considering the matter, are of the view that the residual shrinkage in a properly pre-shrunk cotton fabric should not exceed 1.5 per cent including tolerance in either the warpwise or weftwise direction. We do not find that such detailed investigation has been done in these cases to arrive at the percentage of residual shrinkage in the fabrics in question whether they have got the effect of shrinkage proof. On the other hand it was brought to our notice by the parties that samples of fabrics in the cases of two units, viz., Shri Balaji Felt, Pali and M/s. Mangal Felt Finishing Works have gone under such test and results of analysis of samples revealed that shrinkage in warp is more than 3% and shrinkage in weft is more than 6%. Since this aspect was not rebutted by the Department and no such investigation has been done in the remaining cases, it is not possible for us to come to the conclusion that fabrics have got an effect of shrink-proof. Next question arises whether fabrics were subjected to shrink-proof with the help of zero zero machine in the absence of stenter. It was contended on behalf of the Department that since the rubber blanket or belt essentially makes the fabric mechanically shrink and shrinkage has taken place in addition to calendering even in the absence of stenter exemption cannot be extended in terms of Notification. The contention of the other side on this aspect is relevant and we find that there is some force in it. It was contended that shrink-proofing or sanforising is different than shrinkage of fabrics. The term ‘sanforized’ as defined in the Encyclopedia of Textiles (Second Edition), means “a checked measure of shrinkage”. The trade mark is applied on fabrics that have been shrunk by compressive shrinkage process and indicates that the residual shrinkage of the fabrics is less than 1% and that the tests have been made by the trade mark owner to ensure that the shrinkage confines to the 1% standard. This is obvious that the process should not only involve shrinkage but the fabrics must shrink to the extent that further shrinkage exceeding 1% must not occur. They also drew our attention to the Catalogue, technical literature and copy of the letter No. DS: TC: 31326: 85 dated 8-4-1985 from the manufacturer M/s. Dhall Enterprises & Engineers Pvt. Ltd., Ahmedabad addressed to the Ministry of Commerce explaining that the zero zero machine consists of and the function of each section of the machine performs it. Further we find that opinion given by ATIRA also of the view that purpose of the stenter is to present the fabrics free of creases and in uniform width before it enters the shrinking unit. In case the width of which was already adjusted or fabric varieties passed through the compressive shrinkage, the use of stenter is not required. In view of the facts and circumstances with reference to mechanism of the zero zero machine installed in these cases, we are not convinced that Rubber Belt does the function of shrink-proof apart from making the fabric mechanically shrink. We are of the view that the presence of stenter in these type of machinery employed in these cases is necessary to determine the width and dimensional stability. Since sufficient evidence was not placed on record to show the compressive shrink was done with the help of zero zero machine and since we are not convinced that Rubber belt acted as a shrink-proof in the process of shrinkage, we conclude that fabrics were not processed under shrink-proof. When once we come to the conclusion that fabrics were not subjected to process of shrink-proof, we do not find any justification to deny the benefit in terms of Notification even though process of shrinkage has taken place as incidental to the process of calendering. Since parties are succeeding on the issue of eligibility of exemption in terms of Notification No. 80/76 or under 253/82, we do not fed it necessary to go into other issues raised by both sides.
19. All these appeals are disposed of in the above terms.
K.S. Venkataramani, Member (T)
20. While respectfully agreeing with the conclusions of the Hon’ble Member Judicial it may be added that the Explanation to the Notification No. 253/82 inserted by amending Notification No. 213/88 makes it clear that the notification issuing authority intended to include in the term calendering appearing therein the processing of cotton fabrics with the aid of Zero Zero machine without a stentering attachment as being a process of calendering for the purpose of the notification. Calendering as a generic term was already mentioned in the notification. The species of calendering not covered by that term had also been carved out to say that calendering with grooved rollers is excluded. It is not the case of the Department that in any of these cases there was calendering with grooved rollers. Therefore it follows that the Explanation to Notification No. 253/82 was added as a measure of EX ABUNDANTIA CAUTELA to specify that processing done with the zero zero machine without stenter is also covered by the scope of the term calendering for the purpose of the notification. Therefore it cannot be said that the Explanation had the effect of enlarging the scope of the exemption which could possibly be a ground for saying that the amendment can have only prospective effect. The view that the addition of the Explanation was clarificatory also finds support by the fact that it was evidently issued in response to representations to the Ministry from the trade which are on record. The representation from Rajasthan Textile Hand Processors Association dated 12-4-1988 indicates that it has been made with reference inter alia to the report of the Deputy Chief Chemist after visiting the factories and studying the processes and giving certain conclusions as to the nature of the process being more akin to shrink-proofing other than calendering. Therefore it is possible to conclude in the facts of this case that the Explanation came to be added as an insertion to the existing notification to make explicit the intention of the notification issuing authority which was already implicit in the Notification No. 253/82. In such a view of the matter, it has to be held that the assessees herein are entitled to the exemption under the notifications since in all these cases admittedly the processing of cotton fabrics has been undertaken with zero zero machines without stenter attachment in terms of the Explanation to the Notification No. 253/82.