2005 (12) TMI 360 - AT - Central Excise

Summary

Issues:
1. Classification of terry towels in running length under Central Excise Tariff.
2. Eligibility for Small Scale Industry (SSI) exemption for terry towels.
3. Dispute over classification under specific chapter sub-headings.

Analysis:
1. The primary issue in this case revolved around the classification of terry towels in running length under the Central Excise Tariff. The Commissioner held that terry towels should be classified under chapter sub-heading 6302.00, in line with previous decisions by the Hon'ble Tribunal and other Commissioners. The Commissioner rejected the Department's argument that the towels should be classified under sub-heading 5802.22, emphasizing the presence of a dividing thread in the running length as a key factor in determining the classification.

2. Another crucial aspect of the judgment was the eligibility of terry towels for Small Scale Industry (SSI) exemption. The Commissioner ruled that terry towels classified under sub-heading 6302.00 were indeed eligible for SSI exemption, citing specific notifications. This decision was based on the fact that the clearances fell within the exemption limit specified by the SSI exemption notification, leading to the conclusion that no duty was recoverable from the appellants.

3. The dispute over classification under specific chapter sub-headings was further examined by the Tribunal. The Department contended that terry towels obtained in running length should be classified under chapter sub-heading 5802.22, which would not grant the benefit of the relevant Notification. However, the Tribunal upheld the Commissioner's decision, emphasizing the presence of a dividing thread in the running length as a determining factor for classification under heading 63.02 of the Central Excise Tariff. The Tribunal differentiated this case from previous judgments where the absence of a dividing thread led to a different classification under heading 58.02.

In conclusion, the Tribunal allowed the appeals filed by the appellants, setting aside the impugned orders dated 23-5-2000. The classification of terry towels in running length under sub-heading 6302.00 and eligibility for SSI exemption were upheld, based on the presence of a dividing thread as a key factor in determining the classification under the Central Excise Tariff. The judgment provided a detailed analysis of the legal and factual aspects, citing relevant precedents and notifications to support the decision.