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2025 (5) TMI 1006 - AT - Central ExciseClassification of non-woven fabrics - to be classified under the CETH 5603 or under CETH 39021000? - HELD THAT - The issue involved was examined by the Tribunal in the case of Tirupathi Nonwoven Pvt.Ltd. v. Commissioner of C.Ex. Nagpur 2016 (10) TMI 646 - CESTAT MUMBAI and had held the product as correctly classifiable under CET 5603. As the Department had not conducted any fresh tests as were directed by the Tribunal to support the department s claim that the product would call for classification under Chapter 39 the issue cannot be considered and interpreted rather differently. As the case is pivoted around a classification dispute the process of manufacturing and also laboratory test report are a key factor in deciding the instant issue. The Regional Laboratory at Kolkata of the Textile Committee Ministry of Textiles described the product as non-woven fabric wherein polyolefin fibers are made use of. From the reports it transpires that polyolefin fibers are present in the sample. Also a report was obtained from the Joint Director CRCL Kolkata Customs House who clarified that the sample was found to be Non Woven Sheet Compound of fibers of Polypropylene. The learned adjudicating authority has extensively analyzed the relevant section and chapter notes and as to why the product would merit classification as claimed by the assessee and not as alleged by the Revenue. He has also taken note of such product being cleared by other manufacturers in the jurisdiction classifying them under Chapter 56 - For coming to a conclusion that the product will merit classification under Chapter 39 it is found that no corroborative evidence in the form of any test report has been placed by the Revenue. Further it is found that the basis of classification proposed by the Revenue is a bland statement since the allegation is that the non-woven fabric manufactured by them should be classified under Chapter 39 of CETA 1985. Section VII of the Central Excise Tariff Act deals with Plastic and Articles thereof and Rubber and Articles thereof where under Chapter 39 specifically deals with plastic and articles thereof. It consists of various items falling under Central Excise Tariff 3901 to 3906 with several 6 digits and 8 digits sub-classifications. The 6 digits and 8 digit sub-classifications are important to arrive at the correct rate of duty applicable to a product. In this particular case the Revenue has not even made any attempt to give the details of 6 digits/8 digits of Chapter 39 under which they feel that the product should be classified. Conclusion - Non-woven fabrics made of polypropylene fibers not entirely embedded or coated with plastics are classifiable under Chapter 56 Heading 5603 as non-woven fabrics of man-made filaments. The order of the adjudicating authority is upheld - appeal dismissed.
The core legal questions considered by the Tribunal revolve around the correct classification of the respondent's manufactured product, a non-woven fabric, under the Central Excise Tariff Act, 1985 (CETA). Specifically, the issues include whether the product should be classified under Chapter Heading 5603 (non-woven fabrics of man-made filaments) or under Chapter 39 (plastics and articles thereof), and whether the Revenue's demand based on classification under Chapter 39 is sustainable in the absence of laboratory tests and specific tariff sub-headings. Additionally, the Tribunal considered the relevance and application of Chapter Notes, General Rules for Interpretation, and prior judicial precedents in determining the classification.
Regarding the classification dispute, the Tribunal examined the relevant legal framework, including the Central Excise Tariff Act, 1985, particularly Chapters 39 and 56, and the General Rules for Interpretation of the First Schedule. Chapter 56, Heading 5603, specifically covers non-woven fabrics of man-made filaments, while Chapter 39 deals with plastics and articles thereof. The Tribunal also analyzed Chapter Notes 2(p) of Chapter 39 and 3(b) of Chapter 56, which delineate exclusions and inclusions relevant to the classification of non-woven fabrics embedded in or coated with plastics. In interpreting the law, the Tribunal emphasized that the classification must accord with the heading providing the most specific description, as per Rule 3(a) of the General Rules for Interpretation. The adjudicating authority's reasoning that non-woven fabrics made from polypropylene fibers are correctly classifiable under Chapter 56 was upheld, noting that the product is not entirely embedded or coated with plastics as envisaged by Chapter Note 3(b) of Chapter 56. The Tribunal found that the Revenue's reliance on Chapter 39 was not supported by any fresh laboratory tests, despite directions to conduct such tests, nor did the Revenue specify any 6-digit or 8-digit tariff sub-headings under Chapter 39 to substantiate their claim. Key evidence included laboratory reports from the Regional Laboratory at Kolkata of the Textile Committee, Ministry of Textiles, and the Joint Director, CRCL, Kolkata Customs House, both confirming that the product is a non-woven fabric composed of polypropylene fibers. The adjudicating authority's detailed analysis of the manufacturing process, supported by these reports, established that the product is a textile material and not merely a plastic article. The Tribunal also noted that the respondent had consistently classified the product under Chapter 56 in statutory returns, which were accepted by the department without objection, negating any allegation of suppression or misclassification warranting extended period demands. The Tribunal treated competing arguments by the Revenue and the respondent with due consideration. The Revenue argued that the product, being made from polypropylene granules (plastic), should be classified under Chapter 39, contending that the product is used as packing material and that the show cause notices were justified. The respondent countered that the product is a non-woven fabric, properly falling under Chapter 56, and challenged the vagueness of the show cause notices for failing to specify tariff sub-headings. The Tribunal found the Revenue's arguments unsubstantiated due to lack of laboratory evidence and failure to specify tariff sub-headings, and relied on authoritative precedents to reject the Revenue's contentions. In applying the law to the facts, the Tribunal relied heavily on prior decisions, notably the Tribunal's ruling in Tirupathi Nonwoven Pvt. Ltd. v. Commissioner of Central Excise, Nagpur, where an identical classification issue was resolved in favor of classification under Chapter 56. The Tribunal also referred to the HSN explanatory notes, which explicitly recognize non-woven fabrics manufactured by thermal or mechanical bonding of yarn as textiles under Chapter 56. The Tribunal distinguished the Revenue's reliance on the Supreme Court decision in Porritts & Spencer (Asia) Ltd., which dealt with the definition of textiles in a different statutory context and was thus inapplicable to the scientific classification under the Central Excise Tariff. The Tribunal concluded that the adjudicating authority's order was well-reasoned, supported by evidence, and consistent with legal principles and precedents. The appeal filed by the Revenue was disallowed, and the classification under Chapter Heading 5603 was upheld. The respondent was held entitled to consequential relief as per law. Significant holdings include the Tribunal's affirmation that:
In conclusion, the Tribunal's decision preserves the principle that classification under the Central Excise Tariff must be based on the most specific and appropriate heading supported by evidence, manufacturing process, and authoritative guidance, rejecting vague or unsupported claims by the Revenue. The final determination confirmed the classification of the respondent's product under Chapter Heading 5603, dismissing the Revenue's appeal and upholding the adjudicating authority's order.
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