SHRIRAM PROCESSES vs COMMISSIONER OF CENTRAL EXCISE & CGST-DELHI NORTH

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI

PRINCIPAL BENCH,
COURT NO. III

EXCISE APPEAL NO. 51849 OF 2024

[Arising out of the Order-in-Original No. 26/C. Ex./Pr. Commr./M.M.G./D.N./
2023-24 dated 28/03/2024 passed by The Principal Commissioner, CGST and
Central Excise Commissionerate, New Delhi.]

M/s Shriram Processes, Appellant
177, Swastik Kunj, Sector – 13, Rohini,
Delhi – 110 085.

VERSUS

The Principal Commissioner, Respondent
CGST and Central Excise
Commissionerate, Delhi – North,
C.R. Building, I.P. Estate,
New Delhi – 110 109.

AND
EXCISE APPEAL NO. 50164 OF 2025

[Arising out of the Order-in-Original No. 26/C. Ex./Pr. Commr./M.M.G./D.N./
2023-24 dated 28/03/2024 passed by The Principal Commissioner, CGST and
Central Excise Commissionerate, New Delhi.]

Shri Vinay Aggarwal, Appellant
176, Swastik Kunj, Sector – 13, Rohini,
Delhi – 110 085.

VERSUS

The Principal Commissioner, Respondent
CGST and Central Excise
Commissionerate, Delhi – North,
C.R. Building, I.P. Estate,
New Delhi – 110 109.

Appearance

Ms. Sukriti Das, Advocate for the appellant.
Shri Ratnesh Kumar Mishra, Authorized Representative for the
Department


CORAM:
HON’BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON’BLE SHRI P.V. SUBBA RAO, MEMBER (TECHNICAL)

2 EX/51849 OF 2024 & other
FINAL ORDER NO. 51417-51418/2026
DATE OF HEARING : 22.07.2026
DATE OF DECISION : 01.09.2026
P.V. SUBBA RAO

1
M/s Shriram Processes filed this appeal to assail the
2
order dated 28.3.2024 passed by the Commissioner in the
second de novo proceedings in which he decided the proposals
3
made in the show cause notice dated 18.8.2005 issued to the
4
assessee and its Authorised signatory Shri Vinay Aggarwal . The
proposals in the SCN were initially decided by order dated
22.3.2007 and on appeal by the appellants, this Tribunal, by
Order dated 27.7.2007, remanded the matter to the
Commissioner; thereafter, the Commissioner passed order dated
22.10.2008 and on appeal, this Tribunal, by order dated
1.3.2017, remanded the matter again to the Commissioner. In
pursuance of this remand order, the impugned order has been
passed.

2. The facts of this case are that during a transit check on
07.10.2003, the tempo bearing registration number DL1F1629 of
the assessee was intercepted and was found to contain laminated
fabrics without any duty paying documents. The tempo was
brought back to the assessee‟s factory and searched. Sample of
the goods was drawn and sent to the Central Revenue Control

1. assessee
2. impugned order
3. SCN
4. Vinay

3 EX/51849 OF 2024 & other
5
Laboratory for testing. Its report dated 11.12.2003 stated that
the goods were woven fabrics laminated with polypropylene,
which is appropriately classifiable under Central Excise Tariff
6 7
Heading 903.90. A show cause notice was issued in respect of
the seized goods. As a follow-up, an SCN dated 18.08.2005 was
issued to the assessee covering the period August 2000 to
December 2003 and demanding central excise duty amounting to
Rs. 87,80,513/- with interest and penalties. The proposals in this
show cause notice have been decided in the impugned order.

Submissions of the appellant

3. Learned counsel for the appellant made the following
submissions:
(i) The process of lamination does not amount to
manufacture and hence the goods cleared by the
appellant were not exigible to central excise duty.
Reliance is placed on the decision in the case of Shree
8
Jee laminators versus CCE Delhi .
(ii) The process of lamination/coating was undertaken by
the assessee on fabrics belonging to the principal
manufacturers, and hence the activity qualifies as job
work under the relevant legal provisions.
(iii) Since the activity was undertaken as job work, the
assessee is entitled to the benefit of Notification No.
214/86–CE dated 25.3.1986 and Notification No. 83/94
–CE dated 11.4.1994 and these have been wrongly
denied in the impugned order.
(iv) The Commissioner denied the benefit of the job work
exemption only for the reason that the principal

5. CRCL
6. CETH
7. SCN
8. 2017 (358) E.L.T. 978 (Tri. – Del.)

4 EX/51849 OF 2024 & other
manufacturer had not filed the declarations. Of the total
job work, 40% job work was done for M/s. Antak
Agency who had filed the declaration on 9.7.2003 which
was, however, ignored by the Commissioner.
(v) Commissioner also denied the exemption available to
small scale industries based on the value of clearances.
(vi) The demand has been wrongly computed by the

Commissioner by denying exemptions available to SSI,
to the laminated jute fabrics, etc. and by including a
notional profit to the cost of raw material and job
charges.
(vii) The appellant is entitled to cum-tax benefit.
(viii) Extended period of limitation has been wrongly invoked
in the matter.
(ix) Penalty under Rule 209A of the 1944 Rules and Rule 26
of the 2002 Rules is not imposable on Shri Vinay
Agarwal, who is the employee of the assessee.

Submissions of the Revenue

4. Learned authorised representative for the Revenue
vehemently supported the impugned order and submitted as
follows:
(i) Lamination amounts to manufacture as held by the
Supreme Court in Laminated Packings (P) Ltd.
9
versus Collector of C. Excise .
(ii) The appellant was not registered with the Central Excise
nor had it paid any central excise duty. The
investigation began with interception and seizure of a
consignment and it was revealed that the appellant was
engaged in lamination of cotton/ jute/man-made fabrics
with plastic (LDPE, PP and HDPE). Shri Damodar Das

9. 1990 (49) E.L.T. 326 (S.C.)

5 EX/51849 OF 2024 & other
Aggarwal, proprietor, had, in his statement, admitted to
the manufacture of these fabrics.
(iii) The submission of the appellant that it was entitled to
the exemption available under Notification No. 214/86-
CE dated 25.3.1986 and Notification No. 83/94-CE
dated 11.4.1994 is not correct. Both these exemptions
were available where the principal who supplied the
goods gives an undertaking that he would receive the
goods and utilise them in the manufacture excisable
goods and would pay duty on such goods. No such
undertaking was produced by the appellant.
(iv) The demand of duty has been calculated on the basis of
the figures in the balance sheets and the figures
provided by the appellant as indicated in paragraph
73.1 & 73.2 of the impugned order.
(v) In view of the above, the impugned order may be upheld
and both appeals may be dismissed.

Findings

5. We have considered the submissions advanced by both
sides and perused the records. We note that this is the third
round of litigation in the matter.

6. The appellant‟s first contention is that lamination does not
amount to manufacture at all. Reliance is placed on the order of a
bench of this Tribunal in Shree Jee Polymers. On the other
hand, learned authorised representative for the Revenue asserted
that lamination does amount to manufacture and placed reliance
on the Supreme Court‟s judgment in Laminated Packings (P)
10
Ltd. versus Collector of C. Ex.


10. 1990 (49) E.L.T. 326 (S.C.)

6 EX/51849 OF 2024 & other
8. We find that the principle to be followed to determine if a
process amounts to manufacture or not has been laid down by a
five member Constitutional bench of Supreme Court in Union of
11
India versus Delhi Cloth and General Mills Co. Ltd . During
the relevant period, central excise duty had to be paid at every
stage when manufacture of a good had taken place even if the
good was not cleared from the factory. The respondent was
manufacturing Vanaspati (hydrogenated oil) from vegetable oil
and the question was whether refined oil had come into existence
during the process and hence duty should also be paid on the
refined oil which emerged in the process of manufacture. The
Supreme Court quoted, with approval, Permanent Edition of
Words and Phrases, Vol, 26 from an American judgment, the
following:

“Manufacture implies a change, but every change is not
manufacture and yet every change of an article is the result
of treatment, labour and manipulation. But something more
is necessary and there must be transformation: a new and
different article must emerge having a distinct name,
character or use.”

9. In that case, the Supreme Court found that refined oil, as
known to market, had not come into existence during the process
of manufacture of vanaspati because the oil was not deodorised
and ruled in favour of the assessee. However, the principle laid
down in Delhi Cloth and General Mills to determine if a

11. 1977 (1) E.L.T. (J199) (S.C.)

7 EX/51849 OF 2024 & other
process would amount to manufacture has been followed in
several judgments ever since.

10. We have no manner of doubt that a fabric of cotton, jute or
man-made fibre and a fabric laminated with plastic (LDPE, PP or
HDPE) are different articles known to the market known by
different names and have different uses. Therefore, the process
of laminating a fabric with LDPE or HDPE amounts to
manufacture.

11. In Laminated Packings the question before the Supreme
Court was whether lamination of Kraft paper with polyethylene
would amount to manufacture. Noting that Kraft paper and
laminated Kraft paper are different identifiable goods and relying
on previous judgments, the Supreme Court held that lamination
amounts to manufacture. Learned counsel relied on Shree Jee
Laminates decision of this Tribunal to assert that lamination
does not amount to manufacture. We find that Laminated
Packings judgment of the Supreme Court was relied on by the
department and was cited in Shree Jee Laminates . However,
without any discussion or distinguishing Laminated Packings , it
has been held in Shree Jee Laminates that lamination does not
amount to manufacture.

12. We respectfully follow the judgment of the Supreme Court
in Laminated Packings and hold that lamination does amount
to manufacture.

8 EX/51849 OF 2024 & other
13. Another submission of the learned counsel for the appellant
is that the work which they had carried out as job work for others
was exempted by Notification No. 214/86-CE dated 25.3.1986
and even though the principals had not given an undertaking as
per the notification, their goods should be exempted. This
submission deserves to be rejected. Notifications No. 214/86-CE
dated 25.3.1986 and Notification No. 83/94 – CE dated
11.4.1994 provide exemption for goods manufactured on job
work basis if the principal gives an undertaking to use them to
manufacture final products in his factory and clear them on
payment of duty. Without such an undertaking from the principal,
the goods manufactured by the job worker were evidently liable
to duty. The undertaking by the Principal is not a formality but is
the very basis for the exemption without which the appellant was
not entitled to the exemption.

14. Learned counsel further submitted that one of its Principals
M/s, Antak Agencies had filed a declaration on 9.7.2003 under
Notification No. 214/86-CE which was not considered by the
Commissioner while confirming the demand. We find from
paragraphs 59.1 to 59.3 of the impugned order, the
Commissioner denied the benefit of exemption under the
notification on the ground that the notification was available for
job work which, as per the notification, means „processing of or
working upon raw materials or semi-finished goods supplied to
the job worker, so as to complete a part or whole of the process
resulting in the manufacture of finishing of an article or any

9 EX/51849 OF 2024 & other
operation which is essential for the aforesaid process, and the
expression “job worker” shall be construed accordingly.” The
commissioner noted in the impugned order that since only part of
the inputs or semi-finished goods were supplied by the Principal
and the rest were purchased by the appellant, the work
undertaken by the appellant was not job work.

15. This finding in the impugned order is not correct. Whenever
a job worker works on the material supplied to it, some material
or inputs of the job worker are also likely to get used but that
does not mean that it was not a job work. A simple illustration
will make it clear. If you give a piece of cloth to the tailor to
make you a shirt, the tailor would, of course, use the thread,
buttons, etc. which are essential to the shirt but it does not mean
that the tailor is not rendering a service for you and that he is
manufacturing the shirt and selling it to you. The essence of both
the job work notifications is that if the Principal undertakes to use
the goods manufactured by the job worker for manufacture of
other excisable goods on which it would pay excise duty or export
them, the job worker does not have to pay excise duty.
Therefore, the appellant is entitled to the benefit of these two
exemption notifications to the extent it had produced the
undertakings from the Principal manufacturers.

16. Next is the question of the exemption available to small
scale industries based on the value of the excisable goods cleared
under Notification No. 8/2000-CE dated 1.3.2000, Notification

10 EX/51849 OF 2024 & other
No. 8/2001-CE, Notification No. 8/2002-CE and Notification No.
8/2003-CE. According to the learned counsel, it was entitled to
the benefit of the exemptions which was denied to it. We find
that in paragraph 74 of the impugned order, the Commissioner
denied the benefit of the exemption on the ground that the
laminated HDPE fabrics cleared by the appellant would fall under
Central Excise Tariff heading 3926.90 which were not covered by
the exemption.

17. We find that the exemption was available to the goods
indicated in the Annexures to the respective notifications. The
Annexures read „All goods specified in the Schedule to the Central
Excise Tariff Act, 1985 other than the following:
……..
(ix) strips of plastics intended for weaving of fabrics or
sacks, polyurethane foam and articles of polyurethane foam,
falling under Chapter 39;
…‟

18. All excisable goods were therefore, exempted under the
SSI exemption notifications other than those which were
excluded. What is excluded is the strips of plastics falling under
Chapter 39 and not the laminated HDPE fabrics as held by the
Commissioner. The assessee, therefore, is entitled to the benefit
of the exemption notifications during the relevant years.

19. Another submission of the appellant is that a notional profit
was wrongly added in reckoning the value of the goods cleared
by it on job work basis and only the value of the goods supplied

11 EX/51849 OF 2024 & other
by the Principal and the job charges could have been included in
it. We find that Rule 10A of the Central Excise (Determination of
Price of Excisable Goods) Rules, 2000 stipulates valuation of the
goods cleared on job work during the relevant period. It reads as
follows:
RULE 10A. Where the excisable goods are produced or
manufactured by a job-worker, on behalf of a person(hereinafter
referred to as principal manufacturer), then, -

(i) in a case where the goods are sold by the principal
manufacturer for delivery at the time of removal of goods from
the factory of job-worker, where the principal manufacturer and
the buyer of the goods are not related and the price is the sole
consideration for the sale, the value of the excisable goods shall
be the transaction value of the said goods sold by the principal
manufacturer;

(ii) in a case where the goods are not sold by the principal
manufacturer at the time of removal of goods from the factory of
the job-worker, but are transferred to some other place from
where the said goods are to be sold after their clearance from the
factory of job-worker and where the principal manufacturer and
buyer of the goods are not related and the price is the sole
consideration for the sale, the value of the excisable goods shall
be the normal transaction value of such goods sold from such
other place at or about the same time and, where such goods are
not sold at or about the same time, at the time nearest to the
time of removal of said goods from the factory of job-worker;

(iii) in a case not covered under clause (i) or (ii), the provisions of
foregoing rules, wherever applicable, shall mutatis mutandis apply
for determination of the value of the excisable goods :

Provided that the cost of transportation, if any, from the premises,
wherefrom the goods are sold, to the place of delivery shall not be
included in the value of excisable goods.

12 EX/51849 OF 2024 & other
Explanation. - For the purposes of this rule, job-worker means a
person engaged in the manufacture or production of goods on
behalf of a principal manufacturer, from any inputs or goods
supplied by the said principal manufacturer or by any other person
authorised by him.

20. This Rule does not include any provision for adding notional
profit. The value must be determined as per Rule 10A of the
Valuation Rules. The appellant further contended that it must be
given cum-tax benefit.

21. We find that if the appellant had sold goods cleared by it,
the sale value of such goods should, as per the established law,
be considered as cum tax value. However, to the extent the
appellant had cleared the goods after doing job work, there was
no sale at all and in such cases, the value has to be determined
as per Rule 10A of the Valuation Rules.

22. The assessee further contended that the extended period of
limitation could not have been invoked in this case. We do not
find this contention correct. The appellant was aware that it was
clearing goods manufactured on job-work and if it assumed the
availability of the benefit of an exemption notification, it was for
it to ensure that necessary undertaking was obtained. According
to the assessee, it had obtained such an undertaking from one
Principal only to which it had cleared 40% of the total goods.
There is no reason for the assessee to not obtain such an
undertaking from other Principals when it was aware about the
requirements of the notification. Such an undertaking would shift
the responsibility to pay duty to the Principal which had given the

13 EX/51849 OF 2024 & other
undertaking; without the undertaking, the appellant was required
to pay central excise duty. In the facts of the case, we find
sufficient grounds to invoke extended period of limitation in
issuing the demand notice.

23. As far as the penalty on Shri Vinay Aggarwal under Rule
209A of the Central Excise Rules, 1944 read with Rule 26 of the
Central Excise Rules, 2002 is concerned, learned counsel
submitted that Shri Vinay Aggarwal was an employee and penalty
should not have been imposed on him. We find that both Rule
209A of the Central Excise Rules, 1944 and section 26 of the
Central Excise Rules, 2002 provide for penalty for acts or
omissions which render goods liable to confiscation under the
Act. Since in the impugned order, there is no order of
confiscation, penalty under these two sections cannot be
sustained.

24. In view of the above, we modify the impugned order as
follows:
(i) The finding that lamination amounts to manufacture is
upheld;
(ii) The demand of duty on lamination is upheld;
(iii) Exemption from duty on goods manufactured on job
work is allowed only to the extent the requisite
declarations were provided by the Principal;
(iv) The value of goods cleared on job work where the
declaration from the Principal is not available shall be
determined as per Rule 10A of the Valuation Rules,
2000;

14 EX/51849 OF 2024 & other
(v) For the goods cleared by the assessee on its own
account, the sale price of the goods cleared shall be
considered as the cum duty price and the duty re-
calculated;
(vi) The appellant is entitled to SSI exemption;
(vii) The appellant shall calculate the duty liability as above
and pay it accordingly and intimate the Commissioner;
(viii) The amount of interest under section 11AB of the Act
and mandatory penalty under Rule 173Q of the Central
Excise Rules, 1944 shall be reduced according to the
duty re-determined as above;
(ix) Invocation of extended period of limitation is upheld;
(x) The penalty under Rule 209A of the Central Excise Rules
1944 read with Rule 26 of the Central Excise Rules,
2002 imposed on Shri Vinay Aggarwal is set aside.

25. Excise Appeal No. 52849 of 2024 filed by Shriram
Processes is partly allowed and the impugned order is modified
as above.

26. Excise Appeal No. 50164 of 2025 filed by Shri Vinay
Aggarwal is allowed and the penalty imposed on him is set aside.
(Order pronounced in open court on 01/09/2026.)




(ASHOK JINDAL)
MEMBER (JUDICIAL)




(P.V. SUBBA RAO)
MEMBER (TECHNICAL)

PK