G.R. Sharma, Member (T)
1. By the present appeal the appellants have assailed the order of Collector, Central Excise. The Collector, in his Order-in-Original had held :
"14. In view of my foregoing findings, I find that M/s. Alagiri Industries, Bangalore are liable to pay Additional Duty (handloom cess) on the HDPE fabrics coated/laminated and cleared by them during October, 1984 to October 1985. I accordingly demand from M/s Alagiri Industries, Bangalore, Additional Excise Duty (handloom cess) amounting to Rs. 57,242.87 on 30,12,782.4 sq. meters of HDPE fabrics coated/laminated, cleared during the period October, 1984 to October, 1985 under Section 11A of the Central Excises and Salt Act, 1944."
2. The facts of the case are that the appellants are engaged in the manufacture of coated/laminated HDPE woven fabrics on job work basis. They commenced this activity in 1984. The department alleged that the appellants were clearing their goods without payment of additional duty (handloom cess) as required under the Khadi and Handloom Industries Development (AED on cloth) Act, 1953. A show cause notice was issued to the appellants on 31-10-1985 asking them to explain as to-why they should not pay duty on the said goods. In reply to the show cause notice, the appellants submitted that they had furnished the details of the job work done; that lamination of HDPE woven fabrics was exempted from whole of duty; that handloom cess was leviable on cloth; that cloth has been defined in Section 2(b) of the Khadi and Other Handloom Industries (AED on cloth) Act, 1953; that it did not include man-made fabrics; that under Rule 2 of the Handloom Development Rules, 1975, all varieties of cloth which are exempted from duty of excise were exempted from handloom cess. During the course of personal hearing before the learned Collector, it was pleaded for the appellants that a cursory glance at the preamble of the Act would reveal that man-made fabrics would fall outside the scope of levy of Handloom cess; that HDPE fabrics were exempted under Notification No. 115(E), dated 1-3-1975. It was also argued by the appellants before the lower authorities that the demand was time barred and that the larger period was not available as the appellants had filed a declaration under Notification No. 111/78, dated 16-8-1978; that there was no allegation of suppression nor was there any evidence adduced as to why a larger period beyond six months was being invoked; that HDPE fabrics were exempted under Notification No. 182/82, dated 11-5-1982.
3. When the matter was called, none appeared for the appellants. Shri J.M. Sharma, the learned JDR was present for the respondent Collector. Since the issue involved in the present appeal did not require detailed examination of various records, it was decided to proceed with the matter.
4. Shri J.M. Sharma, the learned DR submitted that the first issue for determination before the Tribunal was whether handloom cess under the Khadi and other Handloom Industries Development Act, 1953 was chargeable on HDPE (coated/laminated fabrics). He submitted that the appellants pointed out that Section 2(b) of that Cess Act does not cover man-made fabrics. The ld. DR submitted that this impression of the appellants is incorrect inasmuch as the term 'cloth' as defined in Section 2(b) of the Cess Act reads : "2(b) - Cloth has the meaning assigned to it in the first schedule to the Central Excises and Salt Act, 1944 (1 of 1944)." He submitted that the Tribunal in the case of Bengal Luxmi Cotton Mill reported in 1984 (15) E.L.T. 472 held that cloth is synonymous for the term 'fabrics' for levy of handloom cess. He submitted that all fabrics are covered by the term 'cloth'. The ld. DR submitted that the defence plea that no cess is leviable on the said goods as it is exempted under Notification No. 115(E) dated 1-3-1975 has no force. Elaborating it further, the learned DR submitted that no doubt, under the said Notification, cess on certain varieties of cloth was exempted but those fabrics which are processed, the cess is recoverable. In support of this contention, the ld. DR cited the proviso to Notification No. 115(E) reading, "provided further that nothing contained in this rule shall apply to processed man-made fabrics which are exempted from the duty of excise leviable thereon under the Central Excises and Salt Act, 1944." He submitted that coated/laminated HDPE fabrics are processed man-made fabrics and therefore, appropriate handloom cess under the Cess Act shall be leviable on laminated/coated HDPE fabrics. The ld. DR therefore, submitted that the appeal may be rejected.
5. Heard the submissions of the learned JDR, perused the case records. Section 2(b) reads : "cloth" means cotton, woollen, silk and rayon or artificial silk fabrics as defined in the first schedule.' We find that the contentions of the appellants regarding Section 2(b) is correct inasmuch as in the definition the term 'HDPE' fabrics is not there. We find therefore that Section 2(b) does not cover HDPE fabrics. Since the definition of the goods given in Section 2(b) of the Act does not include HDPE fabrics, therefore, the question of levy of cess on HDPE fabrics laminated or otherwise does not arise. Since on merits, no handloom cess duty is chargeable on HDPE fabrics, therefore, the other points agitated become irrelevant. In the circumstances, the appeal is allowed.