1999 (10) TMI 166 - AT - Central Excise

Summary

Issues: Classification of fabrics under Chapter Heading 58.06 vs. Chapter Heading 52.05

Classification Issue:
The case involved a dispute regarding the classification of fabrics under Chapter Heading 58.06 or Chapter Heading 52.05 for excise duty purposes. The respondent, a composite textile mill, was accused of clearing grey unprocessed fabrics of width not exceeding 30 cms at NIL rate of duty under Chapter Heading 52.05. The Superintendent of Central Excise alleged that these fabrics should be classified under Chapter Heading 58.06, attracting a duty rate of 12% ad valorem basic + Special Excise Duty. The respondent argued that the fabrics should be classified under Chapter Heading 52.05, as per their approved Classification List. The Assistant Collector confirmed the demand by classifying the goods under Chapter Heading 58.06, a decision upheld by the Collector on appeal.

Arguments by Revenue:
The Revenue contended that the fabrics cleared by the respondent were of width not exceeding 30 cms, making them narrow width fabrics under Chapter Heading 58.06. They argued that the fabrics were manufactured in a way that left perforations every 30 cms, and after slitting them to width not exceeding 30 cms, selvedges were provided by leaving perforations in the fabrics. The Revenue cited Chapter Note 5(a) of HSN and Fair Child's Dictionary of Textiles to support their position that the fabrics satisfied the conditions for classification under Chapter Heading 58.06.

Arguments by Respondents:
The respondents argued that for classification under Chapter Heading 58.06, the fabrics must not only be of width not exceeding 30 cms but also have selvedges on both edges. They contended that the fabrics were woven on normal looms with a perforation created after every 30 cms, where the fabrics were cut without any selvedges provided. Therefore, they claimed that the absence of selvedges meant the fabrics could not be classified under Chapter Heading 58.06.

Judgment:
The Tribunal analyzed the manufacturing process and noted that the fabrics were woven on normal looms with perforations every 30 cms, where the fabrics were cut and cleared. It was observed that for classification under Chapter Heading 58.06, the fabrics must have selvedges on both edges. Since there was no evidence of selvedges on the fabrics, the Tribunal agreed with the respondents' argument that the fabrics were not classifiable under Chapter sub-heading 5806.00 but should be classified under Chapter Heading 52.05. Therefore, the appeal by the Revenue was rejected, affirming the classification of the fabrics under Chapter Heading 52.05.