TMI Blog2005 (1) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... arties Preferred appeals to the Supreme Court against the said order. These appeals have since been disposed of by the court as per judgment dated 5-5-2004 reported as Ugam Chand Bhandari v. CCE, Madras, [2004 (167) E.L.T. 491 (S.C.) = 2004 (62) RLT 240 (SC)]. Their lordships have upheld the classification of the assessees' tarpaulins under Heading 59.06. Para (8) of the judgment in Ugam Chand Bhandari (supra) is relevant and the same reads thus: "8. As stated earlier, finding recorded by the Tribunal as to the nature of the product is after examining relevant material with reference to relevant entries. The denial of cross-examination was due to the lapse of the appellant and cannot take advantage of the same in these proceedings. The Tribunal held that the fabric manufactured by the appellants is impregnated and, therefore, has to be considered as fabric impregnated with materials other than those mentioned under Tariff Headings 59.02 and 59.05. Such impregnation clearly indicated that under the scheme of the Central Excise Tariff the impregnated fabrics with a coating and which is visible to the naked eye on the material on record being one of the finding of fact, we cannot in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Commissioner of Central Excise, Chennai-I in respect of Tarpaulin fabrics manufactured and cleared by M/s. Maruthi Tarpaulin Industries and M/s. Sales International. The following appeals of the Department claiming classification of the goods under SH 5906.90 are against these orders: Order- in -Original Revenue's Appeal No. No. 10/2000, dt. 30-6-2000 E/734/2001 No. 6/2000, dt. 14-8-2000 E/974/2001, E/975/2001 Appeal No. E/1296/2000 of M/s. Rohini Mills (P) Ltd. for classification of Tarpaulin made-ups under SH 5207.00 is against Order-in-Original No. 12/2000, dt. 30-6-2000 passed by C.C.E, Chennai -II classifying the goods under SH 6301.00 and confirming demand of duty thereon for 1994-95. 3. We have also before us nine other appeals with stay applications filed by assessees. Five of these appeals are against classification of Tarpaulin made-ups under SH 63.06 (as claimed by the Revenue) accompanied by demands of duty and are listed below Impugned Order Appeal No. Appellant Order-in-Appeal No. 19/2000, dated 10-10- 2000 E/62/200 M/s. Bharat Textiles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is called "tarpaulin fabric/cloth" is substantially the same. To cite a specimen, M/s. Pondicherry Water Proofers manufactured it thus: A solution of wax, aluminum stearate and pigments were mixed and the solution was heated in a vessel and transferred to a tank. Grey cotton canvas fabric was dipped into this solution and passed through two rollers, whereafter the canvas was dried by exposure to atmosphere The tarpaulin so manufactured was cut to size and stitched to make what are called "tarpaulin made-ups". Some of the assessees fitted their tarpaulin made-ups with eyelets also. 7. According to the Revenue, the tarpaulin fabrics manufactured and cleared by the assessees during the material periods were classifiable under SH 5906.90. The assessees would classify the goods under SH 5207.00. The competing entries are as under: 52.07 5207.00 Cotton fabrics (excluding fabrics covered under Heading Nos. 52.09, 52.10 and 52.11), (a) woven on looms other than handlooms, and (b) subjected to the process of bleaching, mercerising, dyeing, printing, water-proofing, shrink- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erical order. However, if there is no visible layer formation, then the said wax proofed/Tarpaulin cloth should be classified in Chapter 52 of the Central Excise Tariff as water-proofed cloth, provided the base fabrics are cotton fabric. While determining whether the deposit on the surface is a visible layer or not, a 'layer' should be distinguished from mere presence of residues in uneven patches." In Board's Circular No. 254/88/96-CX, dated 18-10-96, "visible layer" mentioned in the earlier Circular was explained as "uniform coating visible by the naked eye otherwise than through a change of colour". It was also suggested therein that, in case of doubt, samples could be got tested by Dy. Chief Chemist. 9. A co-ordinate Bench of this Tribunal, in the case of CCE Cus., Aurangabad v. Ratan Tarpaulin Water Proof Industries [2000 (126) E.L.T. 782], had occasion to consider the above circulars of the Board as also to consult technical dictionaries/literature on textile materials, in the context of classifying a similar product. The relevant findings of the Bench, which held that the tarpaulin fabric manufactured by the above party was only water-proofed cotton fabric classifiable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is composed of cotton base fabric coated/impregnated with a preparation of waxy matter. The coating/ impregnation can be seen with the naked eye. The Chemical Examiner [Smt. Saroja Raghavan] was cross-examined with reference to this report dated 16-6-95 coupled with the relevant test memo on 3-10-97. Her answers to two questions are crucial and the same are extracted below: "Q: Does this memo require you to ascertain the visible layer formation? A: The question in the memo was whether the impregnation/coating done on the canvass merits classification under Chapter 59 and therefore the reply to the question is 'yes'. Q. In your report you have stated coated being visible. In this case wax coating/impregnation having taken place, did it leave a visible layer formation? A: I have mentioned in my report that wax coating/impregnation, there was no layer." When the Chemical Examiner was asked to specify as to whether the sample was coated or impregnated, she replied that it was "coated/impregnated". In answer to a supplementary query, she said she had used the expression "coated/impregnated" in her test reports because she had to use such expression as per the Tariff. Significan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that where the fabric is coated, the base fabric structure is hidden, i.e., concealed from view, though the coating itself is visible. As "coating" and "layer formation" are synonymous expressions as understood by the Board (vide Circulars ibid), the fabric must have a uniform layer of coated material over its surface, visible to the naked eye and concealing the base fabric structure from view so as to qualify for classification under Heading 59.06 in terms of the criteria laid down by CBEC on the basis of Chapter I Note 5(a). But what was stated by Smt. Padmasini in her cross-examination (which was held after she furnished the above opinion) was that she did not have any idea whether the process of manufacture of the fabrics in question would result in layer formation. Thus the oral evidence of the two Chemical Examiners could hardly support the Revenue's claim that the tarpaulin fabrics had such layer formation on surface as could be seen with the naked eye. The Revenue's claim received a further jolt when the Director (Revenue Laboratories) [formerly designated "Chief Chemist"] CRCL, New Delhi, reported (after testing of samples of tarpaulin cloth from six of the assessees) vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs, other than (i) embroidery in the piece, in strips or in motifs, and (ii) fabrics impregnated, coated or laminated with preparations of cellulose derivatives, or of other artificial plastic materials - (a) …………. (b) cotton fabrics, subjected to the process of bleaching, mercerising dyeing, printing, water-proofing, rubberising, shrink-proofing, or gandie processing or any other process or any two or more of these processes." Following the decision in Binny's case as well as the decision in Ratan Tarpaulin Water Proof Industries case, the Tribunal held, in the case of Ducksole (I) Ltd. v. CCE, Ban galore, 2000 (125) E.L.T. 830, that wax-coated water-proof canvas or tarpaulin cloth was classifiable under heading 52.06 under the new Central Excise Tariff Schedule. The decision in Ducksole (supra) was followed in Cargo Tarpaulin Industries v. CCE Banglore, 2003 (154) E.L.T. 514, wherein tarpaulin cloth was classified under heading 52.06 based on a finding that there was no visible formation of layer on the surface of the fabric. In the case of Modi Enterprises v. CCE, Bhubaneshwar, 2001 (131) E.L.T. 76, water-proof fabrics manufactured by the assessee were classified under hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e they are excisable goods but whether such goods can be subjected to duty would depend on whether they were produced or manufactured by the person on whom duty is proposed to be levied. The expression 'produced or manufactured, has further been explained by this Court to mean that the goods so produced must satisfy the test of marketability. Consequently it is always open to an assessee to prove that even though the goods in which he was carrying on business were excisable goods being mentioned in the Schedule but they could not be subjected to duty as they were not goods either because they were not produced or manufactured by it or if they had been produced or manufactured they were not marketed or capable of being marketed." The question is; now, whether any such "manufacture" was involved in the process of cutting-to-size, stitching and 'eyeletting' of tarpaulin fabric. This question was settled by the Andhra Pradesh High Court in TRC No. 215/90 [state of Andhra Pradesh v. Binny Ltd.] as per order dated 13-2-1992, wherein it was held that stitching of the edges of cotton canvas and fitment of eyelets thereto did not bring about any material change in the essential character ..... X X X X Extracts X X X X X X X X Extracts X X X X
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