1995 (4) TMI 166 - AT - Customs

Summary

Issues:
1. Interpretation of Central Excise Notification 52/86-C.E. for exemption eligibility based on the percentage of glass fibre in imported goods.

Detailed Analysis:

The case involved an appeal by the Department against an Order-in-Appeal passed by the Collector of Customs & Central Excise. The respondents imported fibre glass thread, which was initially assessed under specific tariff headings for basic duty and countervailing duty. They later filed a refund claim seeking re-assessment under the same tariff heading but for the benefit of Central Excise Notification 52/86-C.E. at a nil rate of CVD. The Assistant Collector rejected the claim, stating that to qualify for exemption under the notification, the goods must be 100% glass fibre, whereas the imported goods consisted of 85.6% glass fibre. However, the Collector (Appeals) allowed the appeal, presuming that the sample tested contained only glass fibre and its coating substance, thus qualifying as wholly made of glass fibre.

During the proceedings, the Revenue argued that the goods were spun yarns coated with an organic compound, with 85.6% glass fibre content, falling short of the 100% requirement for eligibility under Notification No. 52/86. On the other hand, the respondents' advocate acknowledged the glass fibre percentage but contended that since the spun yarn was predominantly made of glass fibre, the benefit under the notification should apply.

The Tribunal considered both arguments and examined the test report, confirming the 85.6% glass fibre content in the sample, which was in the form of double ply spun yarn with an organic compound coating. The relevant Notification No. 52/86-C.E. outlined descriptions of goods eligible for varying rates of duty, including yarn spun wholly out of glass fibres at a nil rate of duty.

The Tribunal emphasized that the term "wholly" in the notification should be strictly construed and not interpreted as "mainly," as done by the Collector (Appeals). Agreeing with the Revenue's interpretation, the Tribunal held that the goods must be entirely made of glass fibre to qualify for the exemption, and the 85.6% content did not meet this criterion. Consequently, the Tribunal upheld the Assistant Collector's decision to reject the refund claim, allowing the Department's appeal.

In conclusion, the Tribunal's judgment clarified the strict interpretation of the Central Excise Notification 52/86-C.E., emphasizing the requirement for goods to be wholly made of glass fibre to qualify for the nil rate of duty exemption, thereby ruling in favor of the Department based on the specific glass fibre content percentage in the imported goods.