- (1.) These two appeals under Section 35-L of the Central Excises and Salt Act, 1944 (Act) by Messrs Mafatlal Fine Spinning and Manufacturing Co. Ltd., arise out of and are directed against the common appellate-order dated 10-2-1987 of the Customs Excise and Gold (control) Appellate Tribunal in Appeals Nos. 1105 of 1983 and 2540 of 1987 holding that in respect of the deferred duty on yarn appellant is liable to pay interest at 3 per cent of the duty under Rule 49A(2) of the Central Excises and Salt Rules, 1944, as according to the Tribunal, the cotton-fabric cleared is not 'Grey' (unprocessed) cotton-fabric.
(2.) Appellant is engaged in the manufacture of cotton-fabrics in its composite mills and opted under Rule49A for facility of payment of duty of excise payable on the yarn to be deferred until the clearance of the cotton-fabrics manufactured therefrom. The said Rule 49A provides for payment of interest on the excise duty payable on the yarn which is deferred till the manufacture and clearance of the fabrics made out of the dutiable yarn. As such payment is deferred, at the instance of the option of the manufacturer, till completion of manufacture and clearance of fabrics out of the yarn and Rule 49A envisages that when cotton-fabrics are cleared 'grey' (unprocessed) the yarn duty shall be paid at the time of clearance of the fabrics along with 11/2% of the yarn-duty, by way of interest. But where the cotton-fabrics are cleared after 'processing, the interest payable on, and along with, the yarn-duty would, however, be 3% of the yarn-duty.
(3.) The question in these appeals is whether the interest-rate should be one and half per cent or three per cent which in turn depends upon whether the cotton-fabrics cleared are 'grey' (unprocessed) or they are cleared after 'processing'. The cotton fabrics cleared in this case, admittedly underwent the process of 'calendering' and 'shearing' . The cognate and sequential question is whether these processes render the 'grey' fabric, a' processed' fabric within the meaning of Rule 49A(2). The Appellate Tribunal has held that 'calendering' and 'shearing' are 'finishing-processes' and render the 'Grey' fabrics to cease to be 'unprocessed' so as to attract interest at 3%.;