By TIOL News Service

CHENNAI, NOV 29, 2013: THE Misc. Order No.351/10, dated 16.06.2010 - (2010-TIOL-1222-CESTAT-MAD) of the Division Bench of this Tribunal has referred for consideration of the Larger Bench, the issue whether the process of cutting of carpet matting in rolls; and stitching the edges and providing a lining to the cut sizes, to facilitate use as floor mats, amounts to manufacture and the emerging product is exigible to excise duty.

The assessee is a manufacturer of 'floor mats' and 'car mats' classifiable under Chapter Heading 5702.19 of the Central Excise Tariff Act, 1985. The assessee purchased imported tufted carpet rolls scrap; cut them into shapes and sizes - stitched edges to the cut material by employing machines for the same and then sold the same either as car mats or floor mats.

Insofar as 'car mats' are concerned, the adjudicating authority concluded that a process of manufacture is involved; that car mats are classifiable under CSH 8708 of CETA, 1985; that however, the benefit of exemption under Notification No.8/2002-CE, dated 01.03.2002, as claimed is available and, therefore, the assessee is not liable to duty.

In the case of 'floor mats', the adjudicating authority recorded that carpet rolls require to be classified under Chapter 5702.19 of CETA, 1985 and have undergone a process of manufacture, since the carpet rolls are cut into pieces and edges stitched with lining material and the emergent product is capable of independent use as floor mats, distinct from carpet rolls from which the emerging product ensues after the process of manufacture.

On application of the generic principles regarding identification of what processes amount to manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944, illustrated by decisions of the Supreme Court and of the Larger Bench of this Tribunal, Tribunal (Larger Bench) is compelled to the view that the cutting of carpet rolls into smaller sizes and subjecting such cut sizes to a process of stitching linings at the edges would not amount to manufacture nor result in emergence of a distinct independent commodity, exigible to duty under provisions of Section 2(f) of the Central Excise Act, 1944.

(See 2013-TIOL-1777-CESTAT-MAD-LB)