1995 (5) TMI 118 - AT - Central Excise

Summary

Issues:
Classification of yarn containing man-made fiber of non-cellulosic origin, duty liability on yarn, distinction between synthetic waste and fiber, reliance on chemical examiner's report, applicability of case law precedent.

Classification of Yarn:
The appeal was against an Order-in-Original passed by the Additional Collector of Customs & Excise, Jaipur, regarding the classification of yarn found in a surprise visit to the factory premises. The yarn was observed to contain man-made fibers of non-cellulosic origin, leading to a dispute on its classification under the Central Excises & Salt Act, 1944. The appellants argued that the yarn was manufactured from synthetic waste and cellulosic fiber, thus classifiable under different tariff items. However, the Adjudicating Authority confirmed that the yarn indeed contained man-made non-cellulosic polyester fiber, leading to the demand for short-paid duty.

Duty Liability:
The show cause notice demanded duty amounting to Rs. 59,855.00, alleging that the appellants had evaded payment due to the presence of fibers of non-cellulosic nature in the yarn. The appellants contested this, stating that the yarn was manufactured from synthetic waste and cellulosic fiber, correctly classifiable under specific tariff items. Despite the appellants' contentions, the Adjudicating Authority upheld the duty liability, imposing a redemption fine and penalty.

Distinction between Synthetic Waste and Fiber:
The crux of the dispute revolved around the distinction between synthetic waste and fiber. The appellants argued that the yarn was made from synthetic waste, which differs from man-made fiber of non-cellulosic origin. They contended that the use of synthetic waste in the manufacturing process did not warrant the classification imposed by the Adjudicating Authority. However, the Authority maintained that the yarn indeed contained man-made non-cellulosic polyester fiber, as evidenced by the examination report and markings on the cones and bags.

Reliance on Chemical Examiner's Report:
Both parties relied on the chemical examiner's report to support their arguments. The report detailed the composition of the yarn samples, confirming the presence of man-made fibers of non-cellulosic origin. The appellants challenged the reliability of the report, emphasizing the absence of testing on raw materials used in the yarn. However, the Adjudicating Authority found the report conclusive in establishing the fiber composition of the yarn.

Applicability of Case Law Precedent:
The appellants cited a previous Tribunal decision in the case of Vardhan Syntex to support their argument that yarn spun from synthetic waste and cellulosic fiber should be classified differently. They contended that the yarn in question should be classified under a specific tariff item based on this precedent. However, the Adjudicating Authority and the Tribunal in the current case found that the evidence presented did not align with the appellants' claims, leading to the dismissal of the appeal based on the established fiber composition of the yarn.