1. The Revision Petition filed before Additional Secretary, Government of India, Ministry of Finance under section 36 of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act), as it then stood, has been,transferred to the Tribunal by virtue of provision of section 35P of the Act, and has been taken to be disposed of as such.
2. The appellant feels aggrieved by an order passed by the Appellate Collector of Central Excise, Calcutta on 6-7-1981 whereby he confirmed the order dated 25-7-1978 passed by the Assistant Collector of the Division.
3. The impugned order came to be passed on a representation having been made by the appellant by means of a letter dated 28-9-1977 to the effect that the rain-coats and capes manufactured by them in their factory at 3, Mall Road, Dum Dum, Calcutta fell within the category of "Ready to wear apparel" as contemplated by Tariff Item No. 22-D of the Central Excise Tariff and were thus exempt from duty by virtue of Notification No. 95/71, dated 29-5-1971, replaced by Notification No.86/76 issued on 16-3-1976. The party pleaded that the Excise authorities had wrongly classified these items under Tariff Item 68 of the Central Excise Tariff from 1-3-1975 which was the date with effect from which this residuary item was introduced in the Central Excise Tariff. They further pleaded that the goods were, for all intents and purposes, ready-made garments and were being so treated by the Ministry of Foreign Trade inasmuch as the Textiles Committee of the Government of India had been conducting inspection of these goods through its officers with reference to the Inspection Regulations for ready-made garments prescribed by the said Ministry and that these goods were commercially also known as ready-made garments and that the Tariff Entry 68 was being erroneously applied to these goods.
4. This representation was considered, in the first instance, by the Assistant Collector of Central Excise, who declined to accept the contentions raised by the party and holding that although these goods technically could be described as "ready to wear apparel" they were not known as 'ready-made garments' in common trade parlance and that they were special type of articles meant for use in the open on roads and fields during rainy season as a protective against rains and were thus rightly classifiable "as goods not elsewhere specified" falling under Item 68 of the Central Excise Tariff. The assessee's representation was thus held to be without any substance and the refund claim by way of consequential relief was also disallowed.
5. The Assistant Collector also referred, in passing this order, to the fact that it appeared that the assessee had been manufacturing rain coats and caps since long, in any case, prior to 1971 when excise duty was levied for the first time on articles of ready to wear apparel but at that time the assessee did not take out any licence for manufacture of rain-coats and caps on the ground that these goods were not ready to wear apparel. However, when Tariff Item 68 was introduced with effect from 1-3-1975, they obtained necessary Central Excise licence for manufacture of the goods falling under Item 68 of the Tariff and started paying duty and it was only for the first time that they made the representation which was the subject matter of the order, whereby they had questioned the validity of the levy of duty on rain-coats and caps under T.I. 68 of the Central Excise Tariff.
6. The Appellate Collector of Central Excise dismissed the appeal, unholding the view of the Assistant Collector that these rain-coats and cap-did not fall under the category of 'ready-made garments', as commonly known, further observing that these were not worn by the people for the purpose of dressing nor were a means of personal decoration but were used only for protection from rain, snow and wind.
He also found the finding of the Assistant Collector to the effect that the appellant has been manufacturing the products long before 1971 and never took a licence for manufacture of these goods on the ground that the goods are not articles of ready to wear apparel, to be a relevant factor for rejecting the claim of the party.
7. It is against this order that the party went up by way of revision appplication to the Central Government and which is now being disposed of as an appeal. The plea raised in this appeal emphasised that these rain-coats and caps manufactured by the appellant were out of rubberised/processed cotton fabrics, duty paid under T.I. 19 and that these were nothing but ready-made garments falling under Item 22D of the Central Excise Tariff and exempt under Notification No. 95/71-C.E., dated 29-5-1971 and thereafter by Notification No. 86/76-C.E., dated 16-3-1976. It was pleaded that when leather garments, boiler, suits, frocks, dressing gowns, etc. had already been classified under Item 22-D, there is no reason why rain-coats and caps should not be so considered, and they assailed the finding of the Appellate Collector to the effect that these rain-coats and caps are being used only against protection from rain, snow and wind and do not form part of personal decoration and ordinary dress and for that reason could not be considered as "apparel". The appellant also explained in the grounds of appeal the circumstances under which they had not obtained the licence for manufacture of these items by referring to the provisions of rule 174-A of the Central Excise Rules and Notification No. 218/72-C.E.dated 2-12-1972, as modified by Notification No. 31/76-C.E. dated 28-2-1976 and further by Notification No. 188/76-C.E., dated 12-6-1976 which exempted the manufacturers of ready-made garments, as specified in the Schedule annexed to these Notifications, from obtaining any licence. The appellant thus contended that when the statutory rules did away with the requirement of obtaining licence for manufacture of certain types of ready-made garments by means of statutory notifications, there was no question of their having had to take out a Central Excise licence and that this should not be considered to be a factor detracting from the force of their representation that their goods fell within the category of 'ready-made garments' entitled to the benefit of Notifications which exempted them from duty.
8. At the time of hearing, Shri R.M. Das, Consultant appeared for the appellant accompanied by Shri A.K. Mitra, Senior Executive of the Company whereas Revenue was represented by Shri K.D. Tayal, Senior Departmental Representative. Same contentions, as set out in the grounds of appeal, were reiterated at the time of hearing on behalf of the appellant and it was urged that these goods were nothing but ready-made garments and that other Government agencies, including Ministry of Commerce, were treating them as such and the goods were being inspected with reference to same regulations as has been specified for ready-made garments, and that under contract with DGSD also, these items were referred to as "ready-made garments" which was clear indication of the fact that under Government's common usage and in trade parlance, these goods were known as "ready-made garments''.
9. Shri Tayal, however, defended the order passed by the Appellate Collector by stressing that these goods, namely, rain-coats and caps, were not items of ordinary dress as known in common connotation and that they were being manufactured for a specified purpose and he brought into focus paragraphs 3 and 4 of the Assistant Collector's order as confirmed by para 4 of the Appellate Collector's order, and contended that no fallacy could be found in the view, held by the lower authorities.
10. We have given very careful thought and consideration to the matter, particularly, when we were informed during hearing that there was no judicial pronouncement on this issue. We find that there is no denying the fact that these rain-coats and caps are made from duty paid products/fabrics and are cut, tailored and stitched like any other garment, to meet the requirement of ready-made wear, and are available in the market in different sizes, so that they can be made use of according to specific requirement of the buyer without any further changes. According to Webster Dictionary, the word "ready to wear" means some thing ready-made and similarly, the term "clothing" which is another word for dress, has been defined in the said dictionary, to include article of outer cover, such as a coat, etc. It is thus clear, having recourse to the meaning given to this term "ready to wear garments" by such a standard dictionary, such as Webster, that any garment fulfilling the purpose of outer covering would fall within the category of 'ready-made garments'. We further find, on a reference to Customs Co-operation Council Nomenclature (Explanatory Notes) that under the heading "garments" as contained in Chapter 61 (Volume II), both with reference to men and boys wear as well as women and girls' that rain-coats and 'capes' have been enumerated, inter alia, as items constituting garments. These Notes, no doubt, have no direct bearing in deciding issue of the central excise but have definite evidentiary value as regard to the common usages and nomenclature given to a particular item in trade parlance, and they have added force in the sense that they represent the internationally recognised meaning attached to a particular item.
11. We also find that appellants' explanation for not obtaining licence for manufacture of these goods after introduction of the Tariff Entry 22-D in 1971 is fully acceptable because a reference to several notifications issued under rule 174-A of the Central Excise Rules does indicate that notifications were issued exempting manufacturers of certain categories of goods from the requirements of obtaining licence and by means of Notification No. 31/76-C.E. dated 28-2-1976, articles of ready to wear apparel (known commercially as ready-made garments) were also covered by statutory Notification No. 95/71-C.E., dated 29-5-1971, The observation of the Assistant Collector as endorsed by the Appellate Collector have thus no justification while adjudicating the refund claim of the appellant.
12. We, therefore, hold that the appellant's representation was full of justification when they pleaded that these goods were exempt from duty as items of 'ready to wear apparel' by virtue of Government Notification No. 95/71-C.E., dated 29-5-1971 replaced by Notfn. No, 86/76 dated 16-3-76. We therefore, allow the appeal setting aside the order of the Appellate Collector and direct that the appellant be allowed consequential relief by way of refund subject, of course, to rules as to limitation.
13. I have perused the judgment of my learned colleagues on the Bench.
While I agree with them in so far as their conclusion that the rain-coats manufactured by the appellants fell within the category of "ready-to-wear apparel" as contemplated by Item No. 22-B of the Central Excise Tariff Schedule and were thus exempt from duty by virtue of Notification No. 95/71, dated 29-5-71, replaced by Notification No.86/76 dated 16-3-76, I am unable to agree with their similar conclusion in respect of "caps" manufactured by the appellants. Prima-facie, it is difficult to accept categorization of "caps" as "ready-to-wear apparel". The Customs Cooperation Council Nomenclature (Explanatory Notes), to which a reference has been made in the judgment of my learned colleagues, has a separate Chapter (No. 65) for Headgear and parts thereof. Caps are more appropriately classifiable as articles of headgear than as garments.
"22-D. Articles of ready-to-wear apparel (known commercially as ready-made garments) including under garments and body-supporting garments but excluding articles of hosiery, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power".
It is clear that for an article of "ready-to-wear apparel" to come within the ambit of this, item it should be one which is known commercially as "ready-made garments". "Caps" are not commercially known in trade parlance as "ready-made garments" is shown by the fact that in the Customs Cooperation Council Nomenclature, which is an internationally recognised tariff and trade nomenclature, "caps" arc not classified along with "articles of apparel". Further, "garment" according to Webster's dictionary, means "any article of clothing ; outside covering". "Caps" do not fit in with this description. I would, therefore, consider that "caps" are not covered by Item No. 22-D of the CET. From the date Item No. 68 was inserted in the CET Schedule, namely, 1st March, 1975, "caps" would correctly fall within that residuary item.
15. In the result, I allow the appeal in so far as it concerns "rain-coats", reject the appeal in so far as it concerns "caps".