vil Appeal No 369596 of 1988
From the Judgment and Order dated 101287 of Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal No 1105 83 D Order No 96187 B
Soli J Sorabjee section Ganesh CM Mehta PG Gokhale and RB Hathikhanawala for the Appellants
AK Ganguli Mrs Sushma Suri and K Swami for the Respondent
The Judgment of the Court was delivered by VENKATACHALIAH J
These two appeals under Section 35 L of the Act by Messrs Mafatlal Fine Spinning  Manufacturing Co Ltd arise out of and are directed against the common appellate order dated 1021987 of the Customs Excise  Gold Control Appellate Tribunal in Appeal Nos
1105 of 1983 and 2540 of 1987 hold ing that in respect of the deferred duty on yarn appellant is liable to pay interest at 3 per cent of the duty under 207 Rule 49A2 of the Central Excises  Salt Rules 1944 as according to the Tribunal the cotton fabric cleared is not Grey  unprocessed cotton fabric
Appellant is engaged in the manufacture of cotton fabrics in its composite mills and opted under Rule 49A for facility of payment of duty of excise payable on the yarn to be deleted until the clearance of the cotton fabrics manu factured 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 manu facture 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 1 12 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
The question in these appeals is whether the inter est rate should be one  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 49A2
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
We have heard Sri Soli J Sorabjee learned Senior Counsel for the appellant and Sri AK Ganguly learned Senior Counsel for the revenue
There is no dispute that before clearance the cotton fabrics were subjected to calendering  and shearing  which in the jargon of the textile industry are finishing processes 
The Tribunal accordingly held that the cotton fabrics cleared were not unprocessed  for pur poses of Rule 49A1b
In regard to calendering  the Tribunal relied upon the views expressed by it in the case of Siddeshwari Cotton Mills Ltd and Anr
vs Collector of Central Excise Calcutta 1984 18 The relevant part of Rule 49A provides 1 When the cotton fabrics are cleared grey unprocessed the yarn duty payable shall be a the appropriate duty payable on such cellulosic spun yarn or cotton yarn or both as the case may be plus b one and a half per cent of the duty pay able on such cellulosic spun yarn or cotton yarn or both as the case may be by way of interest on the amount of yarn duty 2 When the cotton fabrics are cleared after processing the yarn duty payable shall be a the appropriate duty payable on such cellulosic spun yarn or cotton yarn or both
as the case may be plus b three per cent of the duty payable on such cellulosic spun yarn or cotton yarn or both as the case may be by way of interest on the amount of yarn duty Explanation Omitted as unnecessary
Sri Sorabjee contended that such controversy as is raised as to whether the fabric after calendering  and sheafing  ceases to be unprocessed  fabric would require to be resolved on the language of the Rule 49A itself and that the differentium for the attraction of the different rates of interest was whether the cotton fabrics cleared were grey fabrics  as known and understood in the textile industry
The learned counsel emphasised the distinction between the expressions in Rule 49A1 which refer to the expression cotton fabrics are cleared grey unprocessed on the one hand and the expression cotton fabrics are cleared after processing in Rule 49A2 on the other to demonstrate that the condition for levy of 1 12  is not whether some process or processes were applied to the grey fabrics  but whether such process or processes to which the grey fabric was subjected had the effect of making such grey fabric  cease to be grey fabric 
209 6
Sri Ganguly for the revenue urged that the condi tions for the choice of the different rates of interest are not envisaged in the context whether the process or process es amounted to manufacture  within the meaning of Sec
2fv of the Act but only in the context of estimating the extent of time consumed by the process or processes as that is the criterion for the choice of the rate of inter est
The purpose and intendment of the rule says Sri Gan guly is to provide for the rates of interest on the de ferred yarn duty depending on the time consumed by the processing
If grey cloth  directly obtained from the loom and that is what grey fabric  or greige  in textile parlance means is cleared then a lesser rate of interest is attracted
But where as here the grey fabric  is sub jected to time consuming processes the rate of interest says Sri Ganguly would be the higher rate of 3 per cent taking note of the delays consequential upon such processing occasioned in the recovery of yarn duty
Sri Ganguly ac cordingly submitted that the test appropriate in this context is not whether the grey fabrics undergo any change in their nature or quality as a result of the processes but is whether any time consuming process whatever be its nature is resorted to by the manufacturer which will in turn occasion delays in the clearance of the cotton fabric and thereby delay payment of the yarn duty
Sri Ganguly is right in his submission as to the objects of Rule 49A in prescribing differential rates of interest on deferred yarn duty
But the standards for as sessment of the relative delays depending on which the different rates of interest are charged are themselves set by the rule making authority
The measure of the delay so as to attract one or the other of the rates is not in terms of any period of time specified but is prescribed to be with reference to the nature of the processes
The measure of the delay in deferment of yarn duty legislatively considered appropriate to attract higher rate of interest at 3 is in terms of the processes that would be required to make the greycloth  cease to be grey cloth
That is why in Rule 49A1 the expression grey  is used while in Rule 49A2 that word is omitted
So the period of deferment of yarn duty to attract higher interest 3 would according to the wisdom of the rule makers be the delay incidental to con verting grey fabric  into processed  fabric which ceases to be grey fabric 
With this legislative estimate of the period of deferment appropriate to a situation attracting 3 interest the matter has necessarily to be examined by those standards which in turn bring in the idea whether the process or processes concerned are such as to change the nature of the grey fabric 
This leads to the question whether calendering  and shearing  though by themselves are finishing processes render the grey  fabric cease to be so
210 8
Sri Sorabjee submitted that the process of calender ing is nothing more than mere pressing of the grey fabric  by running it through plain rollers to impart a better finish which is a mere temporary finish
Sri Sorabjee referred to some of the notifications issued under Section 81 of the Act which say that calendering would not be treated as processing
Learned Counsel contended that having regard to the very nature the calendering does not bring about any change in the quality of the goods
In Siddeshwari Cotton Mills  case the Tribunal has referred to certain technical and scientific literature on the process of calendering 
Sri Sorabjee referred to some of them
In Modern Textiles by Dorothy section Lyle John Welay  Sons N York under the caption Finishes that provide Asthethic Values referring to CALENDER FINISH it is stated This is the simplest of all finishes used to give a good appearance to the finished fabric
It consists of passing the fabric between the heated cylinders of a calendering machine
It is simply ironing a fabric to make it smooth and give it a lustrous surface
The round yarns are flattened hence reflect more light
It is a temporary finish since the yarns revert to their round shape with steaming laundering and dry cleaning
Examples of calendered fabrics the sheeting poplin and broadcloth both cotton and wool
Encyclopaedia Britannica has the following to say Calendering is a final process in which heat and pressure are applied to a fabric by pass ing it between heated rollers imparting a flat glossy smooth surface Lustre in creases when the degree of heat and pressure is increased
Calendering is applied to fab rics in which a smooth flat surface is de sirable such as most cottons many linen and silks and various man made fabrics     
Calendering is not usually a permanent process
 In Glossary of Terms relating to treated fabrics IS 2244 1972 published by the Indian Standards Institution it is stated Calender A machine comprised of at least three heated rollers used to produce film and sheet material
211 Calendering A mechanical method done by rollers to provide glaze glossiness hard ness lustre shine and even embossed designs to fabrics
Calendering is usually done to impart a special finish to fabrics
 It is accordingly urged by Sri Sorabjee that calendering does not alter the nature of the grey fabric  and would not take cotton fabric out of Rule 491b
In regard to the process of Shearing Sri Sorabjee relied upon Fairchild s Dictionary of Textiles which says SHEARING 1
A process of cutting fleece from sheep generally by power driven clippers or sometimes by hand shears
Properly sheared fleece will be removed in one solid sheet which is rolled into a compact bundle with the wool on the inside
A finishing operation in which uneven threads are mechanically cut or trimmed from the face of the fabric
Almost always employed for woollen and worsted and extensively employed on other fabrics
The amount of shearing on napped and pile fabrics varies according to the desired height of the nap or pile on clearfinish fabrics like gabardine a very close shearing is given
A finishing operation in which floating por tions of yarn are cut eg in extra warp or extra filling figured fabrics
The method is similar to that employed in para 2 above
 In Textile Terms and Definitions 8th Edn by the Textile Institute SHEAR 1 To Cut the fleece from a sheep
2      3 To cut loose fibres or yarn from the surface of a fabric after weaving also called crop
 In Handbook on Glossary of Textile Terms Bureau of Indian Standards SHEARING Shearing indicates 212 a Cutting fleece from live sheep bTrimming nap or pile to the required uniform height and c Removing all protruding fibres from the surface of the fabric ie cropping
Both calendering  and shearing  involve an assort ment and variety of processes some of which might and some others might not affect or alter the nature of the fabric
Both the expressions calendering  and shearing  are collective expressions representing a number of sub species of operations which depending upon the nature of the par ticular operation may or may not alter the nature of the grey fabric  as such
Sri Sorabjee submitted that in the present case calend ering was not done by grooved  rollers or cylinders but only by plain rollers and the Shearing operation was only to cut off protruding stray fibres from the grey fabric  and that actual processes of calendering  and shearing  involved in the present case were amongst the simplest of the processes and did not have the effect of bringing about any change in the grey fabric 
These matters depend on particularities of the facts of each case and are to be decided on a case by case basis The Tribunal proceeded on the basis that Calendering and Shearing amounted to process of finishing and that by itself without more satisfied the conditions that would take the case out of Rule 49 A1
The test applied by the Appellate Tribunal as well as by the authorities below is not the appropriate one on the language of Rule 49A
Any processing that can take a case out of Rule 49A1b must be a process which renders cotton fabric cease to be grey fabric  as commercially known and understood
The question whether calendering  and shearing  as actually carried out by the appellant has had the effect of taking the cotton fabric out of Rule 49A1 should be decided in the light of this test
In the present cases the claim of the appellant before the authorities that the calendering process employed by them was such as to give temporary finish by pressing the fabric is not controverted
No lasting change is brought about
There is no finding to the contrary
Likewise the claim as to the Shearing which was only to trim 213 protruding stray fibres from the fabric
If these are the nature of the operations the grey  fabric in the facts of these cases does not become new and commercially different commodity and cease to be Grey cloth 
There is thus no justification to take it out of Rule 49A1b
Accordingly these appeals are allowed the appellate order of the Tribunal and the decisions of the authorities below set aside and the liability for payment interest is directed to be computed under Rule 49A1b
No Costs
NPV Appeals allowed


Summary:
R was appointed Professor of Mathematics in a College affiliated to the Gauhati University
He was later appointed Principal of the College
On complaints being made against R the Governing Body of the College held an enquiry and ordered his dismissal as Principal and Professor of Mathematics
R made representations to the Vice Chancellor of the Gauhati University and the Executive Council of the University appointed a committee to report on the propriety of the action taken
Upon the report of the committee that there was no reasonable ground justifying the dismissal of R the Executive Council passed a resolution directing the Governing Body to reinstate R  Held that the Executive Council acted without jurisdiction in so far as it interfered with the action taken against R as the Principal of the College
The Gauhati University Act 1947 and the Statutes framed under section 21g thereof made a distinction between a Principal and a teacher
Clause 3gv Of the Statutes empowered the Executive Council to interfere only with the action taken by the Governing Body of an affiliated College against a teacher and not with action taken against a Principal