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TMI Blog1985 (3) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... ton Fabrics "Cotton Fabrics" means all varieties of fabrics manufactured either wholly or partly from Cotton and includes dhoties, sarees, chaddars, bed-sheets, bed-spreads, counterpanes, table-cloths, embroidery in the piece, in strips or in motifs and fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials but does not include any such fabrics if it contains- (i) 40 per cent or more by weight of wool; (ii) 40 per cent or more by weight of silk; (iii) 60 per cent or more by weight of rayon or artificial silk; or (iv) 50 per cent or more by weight of jute (including Bimlipatam jute or mesta fibre); Provided that in the case of Embroidery in the piece, in strips or in motifs and fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials the percentages referred to in (i) to (iv) above shall be in relation to the base fabrics which are embroidered or impregnated, coated or laminated, as the case may be- I. Cotton fabrics other than (i) embroidery in the piece, in strips or in motifs, and (ii) fabrics impregnated, coated or laminated with prep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the Textile Commissioner; and the Victoria Jubilee Technical Institute (VJTI), Bombay. On the basis of these enquiries, a show-cause notice dated 30-7-1974 was issued to all 10 appellants: In the case of the nine manufacturer/appellants the ground was that though they had been granted permission to work their power-looms under the special procedure (under Rule 96J) and to produce and clear cotton fabrics falling under Item 19I(2) of the Central Excise Tariff, they had instead cleared cotton fabrics known as "furnishing fabrics" falling under Item 191(1), on which duty was payable at ad valorem rates. They were required to show cause why penalties underRule9(2)of the Central Excise Rules should not be imposed on them, why-.the 1 11 metres of "furnishing fabrics" seized from them should not be confiscated under the same Rule, and why duty on 77225.75 metres of "furnishing fabrics" produced and cleared up to 23-2-1974 should not be demanded from them under the same Rule 9(2). Messrs Bali Textiles were called upon to show cause why the 13979.75 metres of "furnishing fabrics" seized from them and in respect of which offences appeared to have been committed should not be confiscate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them as manufacturers, since a wholesaler might describe his wares according to his convenience. 8. Shri Pitre also assailed the reports of the three technical authorities referred to above on the ground that they were inconclusive and had not been able to withstand cross examination. He further submitted that the appellants had produced several witnesses in support of their stand, but the evidence of these witnesses had been conveniently ignored by the Collector. 9. Shri Pitre also submitted that the demands for duty as contained in the Collector's order were bad, since the amount of duty had not been quantified. 10. According to Shri Pitre, the order of the Board was equally unsustainable, as it relied on the same reasoning as had been adopted by the Collector. 11. At the end of Shri Pitre's arguments a question arose whether samples of the goods were available. Time was given to both sides to produce authenticated samples if any. At the resumed hearing on 19-3-1985, Shri Pitre produced a sealed packet superscribed as containing samples of furnishing fabrics taken on 28-2-1974. According to the record, four sets of one sample each were drawn on 28-2.1974, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e number of pieces whereas in respect of the fabrics under seizure, the bills (though printed for chaddars, bed-sheets, etc. in standard sizes) had been overscored with the subscription "dobby cloth"; quantity was shown in terms of length in metres, and the price also charged on the basis of metres. 14. As regards the argument of the appellants that the pieces had been woven in continuous lengths to avoid wastage, Shri Verma submitted that this argument did not have force because the appellants were also simultaneously weaving chaddars in separate pieces. 15. Shri Verma also submitted that the test reports of the Deputy Chief Chemist,. Textile Commissioner and the VJTI supported the Department's contention. 16. Shri Verma further submitted that the wholesalers to whom the goods were sold by Messrs Bali Textiles had clearly stated that they were not selling them, as chaddars but as "Jacquard cloth" and "tapestry powerloom cloth". It had further been stated that tapestry cloth was a furnishing cloth. The statements of the wholesalers would also show that according to the understanding of the trade the goods were furnishing cloth and not chaddars. 17. Replying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry (1-A)], As between entries (1) and (2), entry (1) carries a higher duty liability-firstly, because the statutory rates of duty on some goods falling under entry (2) are lower; and secondly, because goods falling under entry (1) are excluded from the benefit of assessment at the compounded levy rate vide para 3 above). Therefore, when the question is whether any goods would fall within entry (1) which carries a higher duty liability, or entry (2) which carries a lower duty liability, the burden is clearly on the Excise authorities to bring the goods within the scope of entry (1), in accordance with well-known authorities. 21. As mentioned earlier, relevant varieties of fabrics falling under entry (1) are "tapestry" and "furnishing fabrics including jacquard curtain cloth". It will be observed that the terms "tapestry" and "Jacquard" refer to the construction or composition of the fabric, or the method used for weaving it. The terms "furnishing fabrics" and "curtain cloth" refer to the use of the fabrics. In fact, since curtain cloth is also obviously a variety of furnishing fabric, the expression "furnishing fabrics including jacquard curtain cloth" can be taken as a whol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to their defence. 23A. Having set out the basic issue in the case, we shall proceed to examine the evidence on which the Collector's conclusions were based. These can be classified as under :- (i) The popular, or layman's, conception of "chaddars" and "furnishing fabrics"; (ii) the opinion of technical persons such as the Deputy Chief Chemist; (iii) Evidence given or submitted before the Collector; and (iv) Evidence from the accounts of the wholesalers who actually dealt with the goods. 24. Coming to the first aspect, Shri Verma had referred to the criteria which according to the Department would show that the fabric was not chaddars. Chaddars or bedspreads are certainly articles of which the layman has some experience and even a layman's view would be relevant. However, we are doubtful if it can be said that a layman would consider a piece of cloth to be a chaddar only if it had a particular kind of pattern or a "confining design". We think there could also be chaddars with simple designs or even with no design. As regards the point that chaddars should be only in specific sizes, whether or not separated by "a severable light separation of single warps at the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es No. 'C' and 'D' can be used as dress materials". According to the Collector, the advocate for the appellants had requested cross-examination of Shri Subramanian, and the request was accepted. However, there is no further reference in the order to his cross-examination or what transpired therein. Going by the report itself, we have found a difficulty, because we were unable to correlate the samples produced before us by the Department With "A", "B", etc., referred to in the report. Taken by itself, the report is on a "fifty-fifty" basis : two of the samples are said to be usable as furnishing materials and the other two are said to be usable as dress materials. This report does not, therefore, lead to any categorical conclusion about the nature of these fabrics. 30. The relevant extract from the report of the VJTI is given below :- "1. The samples 2 and 3 are woven on Jacquard, and being of course (sic) cloth, are meant for furnishing purpose. 2. The sample 4 is woven on Jaoguard and can be considered both for furnishing and dress material. 3. The sample 1 is woven on dobby and meant only for dress material". This report could be correlated with the samples produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical persons of which there is a record, we are unable to find that they support the categorical conclusion that the goods were furnishing fabrics. 32. We then come to the examination of witnesses before the Collector, as well as evidence in the form of letters, etc., submitted to him. It appears that apart from Prof. Ajgaookar of the VJTI, and Shri Subramanian of the Textile Commissioner's Office (to both of whom reference has already been made), the examination covered the following persons on whose evidence the Department had placed reliance :- 1. Shri O.J.F. Gomes, Assistant Collector Central Excise, who was the investigating officer; 2. Shri P.M. Gandhi, one of the wholesalers to whom the fabrics were sold; 3. Shri K.D. Kapaudia, partner of Messrs H. Dwarakadas, another such wholesaler: 4 to 6. S/Shri P.M. Mehta. A.K. Chhubira and V.M. Shah who had been asked to express their trade opinion about the variety of the cloth pieces constituting the samples. 33. From their side, the appellants produced the following witnesses- 1. Shri Ranga Yadao, Editor, daily "Sanchar" of Sholapur; 2. Shri T.S. Joshi (no further particulars given): 3. Shri N.R. Raut, Manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen from the Collector's order. The Collector relied on the evidence of the witnesses called by the Department in support of the conclusion that the goods were furnishing fabrics. He rejected the evidence of the defence witnesses on various grounds. The evidence of Shri N.R. Raut was rejected on the ground that he had placed emphasis more on the production side, that is by using single beam and producing cloth of continuous length. The evidence of the "two independent gentlemen" was rejected on the ground that it was not supported by any documentary evidence. The three letters from "representative Chambers of Commerce" and 48 letters from various dealers in textiles were not given weight, because they were obtained from the parties after issue of the show cause notice, more or less the same wording was used, and the letters had been obtained to strengthen the views of the licensees. No specific reasons have been given for rejecting the evidence of Shri Ranga Yadao and Shri T.S. Joshi. 39. We had also referred to the description of the goods by the two. wholesalers, namely Messrs. P.M. Gandhi and Messrs. H. Dwarakadas. The purport of these has been brought out in the earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X
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