TMI Blog1993 (2) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued against the respondents demanding differential duty amounting to Rs. 28,60,251.51 P. for the period from September 1987 to January 1988. This demand was subsequently revised to Rs. 25,51,768 vide corrigendum dated 22-3-1988. The assessee had asked for retest by the Chemical Examiner, who reported that the product may not fall under Chapter 59, though it appeared like Buckram and other similar stiffened fabrics due to heavy sizing. The Assistant Collector on the basis of this report, dropped the proceedings. However, the Revenue went in appeal before the Collector (Appeals). On the ground that the product in question should be classified under Heading 59.01 due to the following reasons - (i) specific description of Heading 59.01 viz., textile fabrics coated with gum of amylaceous substances of a kind used for the outer cover of book or the like is satisfied in this case; (ii) Explanatory note to HSN made it clear that not only cloth, plain weave woven fabrics, usually of cotton, linen or man-made heavily coated with gum or amylaceous substances (e.g. starch) which is used for book binding, but also such cloth with other end-uses, would get cover under this heading. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub- heading 59.01 as this is indicated by the expression of a kind used for outer cover of books or the like covering under sub-heading 59.01. 5. We have heard Smt. JMS Sundaram, learned DR for the Revenue and Shri V. Lakshmi Kumaran, learned Counsel for the assessee. The learned DR has argued her case and has taken lot of pains to produce technical literature and definitions appearing in Fairchild s Dictionary of Textiles, Sixth Edition, by Dr. Isabel B. Wingate; extract from Encyclopaedia of Textiles, Third Edition by the Editors of American Fabrics and Fashions Magazine. She has also relied on extracts from Technology of Textile Processing, Volume X, Technology of Finishing by Prof. V.A. Shenai and Dr. Naresh M. Saraf, published by Sevak Publications, Bombay. She has also produced extracts from Modern Textiles by Dorothy Siegert Lyle. She has also referred to the Explanatory Notes to heading 5901 in respect of Sr. No. 4 which refers to Buckram and similar stiffened textile fabrics of a kind used for hat foundations :- These are stiffened textile fabrics made by impregnating lightweight open textile fabrics with adhesives and fillers (e.g. with glue or amylaceous substance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed. It is made stiff for binding. She also referred to the extracts from the book Modern Textile wherein it had been stated that Buckram need not have permanent stiffening. She also referred to the extract from the book American Fabrics . She pointed to the various Board s clarifications and contended that the said clarifications are not helpful to the assessee and hence, the Board s clarification should be discarded. 6. The learned Advocate, at the outset, submitted that the appeal is not maintainable as the department had not taken the ground that the goods are Buckram but had proceeded on the ground that they are coated fabrics requiring classification under Heading 59.01. The department had not raised this ground before the Collector (Appeals) and, therefore, it was not open to the department to raise the same in this appeal. He referred to Section 35E(2) of the Act and pointed out that even as per the provisions of this section, the Revenue has to confine themselves to the ground initiated initially. He pointed out to the impugned order and argued that the learned Collector had confined himself to the aspect of the product being a coated fabrics or not and there was no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central Excise Tariff, 1985. He also pointed out that the test reports were not specific and the Assistant Collector had accepted the various Board s circulars on this aspect of the matter. The learned advocate argued extensively on the Board s circular and its effects. He also pointed out at great length as to how the product was considered in the Textile Industry and in this context, he referred to several notifications and citations. He also pointed out that the process carried out by the party did not amount to manufacture and the cotton fabrics continue to remain cotton fabrics. He drew his strength on the basis of a large number of earlier decisions and the notifications which were issued in this context. He pointed out that the product in question was not permanently stiffened. The starch which was coated on the cotton fabrics did not give permanent stiffening and it was temporary in nature so much so that mere dipping in water could immediately dissolve the starch. The various arguments put forth by the learned advocate on the manner in which the products were considered as stiffened ones in the textile industry, has been noted by us, but it does not require more elabora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h decision or order and may, by order, direct such authority to apply to the Collector (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Collector of Central Excise in his order. The Collector of Central Excise may, of his own motion, call for and examine me record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such authority to apply to the Collector (Appeals) for determination of such points arising out of the decision or order as may be specified by the Collector of Central Excise in his order." As can be seen from sub-section (2), the Collector may direct such authority to apply to Collector (Appeals) for determination of such points arising out of the decision or order as may be specified by the Collector of Central Excise in his order. As we have reproduced above, before the Collector (Appeals) there was no reference to the product being a Buckram. The points which had been raised before the Collector (Appeals), have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Collector (Appeals) for determination of the only point as to whether the Ascorbic Acid used by the appellants in the manufacture of Reclor Capsules and Resteclin Capsules and tablets could be considered as Therapeutically inert . Accordingly, the appeal was filed by the Assistant Collector with respect to the products in question namely Reclor capsules Resteclin capsules and tablets. The same was allowed by the Collector (Appeals) vide his common impugned order dated 3-9-1986. From this impugned order so passed it is also clear that the only issue which was involved in the appeal with respect to the disputed products namely Reclor capsules and Resteclin capsules and tablets was as to whether the ascorbic acid used by the appellants in the manufacture of the said products could be considered as Therapeutically inert or not and he [Collector (Appeals)] while dealing with this question agreed with the view expressed in the authorisation letter issued by the Collector to the Assistant Collector to file appeals. The said discussion of the Collector (Appeals) in the impugned order runs as follows - As regards the remaining products viz. Reclor Capsules, Resteclin capsules and Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assistant Collector to file appeal to the Collector (Appeals) for determination of the only point as to whether the ascorbic acid used in the manufacture of capsules and tablets in question is therapeutically inert or not as in the manufacture of capsules and tablets in question is therapeutically inert or not as in his opinion, the use of Ascorbic acid was not therapeutically inert and this issue (point) on appeal was decided in favour of the department. 63. It deserves to be mentioned here that the department has not filed any Cross Appeal or Cross objections before us on the question that the addition of Ascorbic Acid in Reclor Capsules, Resteclin Capsules and Tablets was not a pharmaceutical necessity and obviously because the matter ended when the Collector of Central Excise (Appeals) did not refer this question for determination in his order passed under sub-section (2) of Section 35E of the Act directing the Assistant Collector to file the appeal. Likewise, the Collector (Appeals) also acted in accordance with law while passing the impugned order confining himself only to the ground taken up in the authorisation of the Collector and in my opinion rightly so because the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of a special nature or in other words, the Commissioner has the exclusive jurisdiction under the Act to revise the order of the ITO if he considers that any order passed by him was erroneous in so far as it was prejudicial to the interests of the Revenue. Before doing so, he is also required to give an opportunity of being heard to the assessee. If after hearing the assessee in pursuance of the notice issued by him under Section 263(1) of the Act, he is not satisfied, he may pass the necessary orders. Of course, the order thus passed will contain the grounds for holding the order of the ITO to be erroneous, as contemplated under Section 263(1) of the Act. Feeling aggrieved therefrom the assessee may file an appeal against the same, as provided under Section 253(1)(c) of the Act. In the memorandum of appeal, the assessee is supposed to attack the order of the Commissioner and to challenge the grounds for decision given by him in his order. At the time of the hearing, if the assessee can satisfy the Tribunal that the grounds for decision given in the order by the Commissioner are wrong on facts or are not tenable in law, the Tribunal has no option, but to accept the appeal and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der India Ltd. and that of Commissioner of Income-tax v. Jagadhari Electric Supply Co. and also the findings given by us, we uphold the contention of the learned advocate and the appeal has to be rejected on this ground alone. 12. As regards the contention on merits is concerned, the learned DR has taken pains and has argued to show that the product is a Buckram and it requires to be classified under Chapter 59 of the Central Excise Tariff Act, 1985. She has lend support from the dictionary meaning and the technical literature. It is well settled that the dictionary meaning and technical literature has to be resorted to only after finding out as to how the product is known in the market. The burden of the classification is squarely on the Department. The Department has not placed any evidence in their support that the product is a Buckram and it requires to be classified under Chapter 59. The Revenue is heavily relying on Explanatory Note 4 to Chapter 5901 which has been extracted above. The Explanatory note clearly indicates that Buckram and similar stiffened textile fabric of a kind used for that foundations would fall under this heading. There is also an indication that certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and individual fibres. The chemical examiner s report does not refer to these definitions at all. The chemical examiner has dearly stated in his test report, which has been supplied by the Superintendent, vide his letter dated 24-3-1987, that the sample is in the form of loosely woven up stiffy finished cotton fabric. It has the characteristics of buckram". The report dated 26-5-1988 of the chemical test also indicates - Each of the 8 samples are in the form of open woven bleached cotton fabrics sized with starch. Each is somewhat showdy. On treatment with hot water, each looses of stiffness. The interstics between the yarn were not closed. The overall count is less than 51 as determined on the basis of yams taken out from the fabrics in each case. Therefore, the test result indicates that the interstics are not filed in this case. Admittedly in this case, there is no permanent stiffness. The requirement of heading 59 clearly shows that the textile fabric has to be stiffened and the definitions which are relied by the SDK from the technical books, clearly indicates that the sizing have to be heavy and the interstics have to be filled and the stiffness has to be permanent. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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