2000 (5) TMI 62 - AT - Central Excise

Summary

Issues:
Classification of 'Taspa Yarn' under Central Excise Tariff - Contrary decisions on classification - Interpretation of Board Circulars - Applicability of Circulars on classification - Binding nature of Board Circulars on authorities - Presence of 'Core Yarn' in Taspa Yarn for classification.

Analysis:
The case revolved around the classification of 'Taspa Yarn' under the Central Excise Tariff, with conflicting decisions existing on whether it falls under Heading 56.06 as 'Special Yarn' or under a different chapter. The appellant argued that 'Taspa Yarn' is man-made, obtained through crimping and texturising of polyester and nylon yarn, resulting in a slub effect. They relied on Board Circulars, specifically Circular No. 26/88-CX.I, which clarified the classification of 'Taspa Yarn' with or without 'Core Yarn'. The appellant emphasized the binding nature of Board Circulars on Customs and Excise authorities, citing previous tribunal decisions where Circulars were not considered. The Revenue contended that 'Taspa Yarn' is a Special yarn, explaining the manufacturing process and supporting the view taken in previous tribunal cases.

The tribunal analyzed the Circulars issued by the Board and their impact on classification decisions. It was noted that Circular No. 26/88-CX.I clarified the classification of 'Taspa Yarn' with 'Core Yarn' under Heading 56.06, and without 'Core Yarn' under a different chapter. The tribunal highlighted the binding nature of Board Circulars on departmental authorities, as established by the Hon'ble Supreme Court. Referring to the decision in Paper Products Ltd. v. Commissioner of Central Excise, the tribunal emphasized that authorities are bound by Board Circulars until amended or revised. Consequently, the Revenue was held bound by the Circular dated 10-10-1988, leading to the classification of Taspa yarn with 'Core Yarn' under Heading 56.06.

In the absence of evidence showing the presence of 'Core Yarn' in the Taspa Yarn under consideration, the tribunal set aside the impugned orders and allowed the appeals, classifying them under the relevant tariff heading. The decision aligned with the interpretation of Board Circulars and established legal principles regarding the binding nature of such circulars on classification matters. The conflicting decisions were resolved by applying the Circular's provisions, ensuring consistency in classification practices under the Central Excise Tariff.