9911796707
TMI Blog2017 (4) TMI 1224X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid two products, namely, Polyester Covered Yarn and Nylon Covered Yarn are manufactured by the appellants by applying the process of conventional covering on machine - MENEGATTO - Model 1500/2000 and also separately by applying the process of air covering on machine SSM-DP2-C. The dispute pertains to the goods manufactured with the application of air covering process. This process of air covering is as under: The Lycra/Spandex Spool is loaded on the feeder and nylon or polyester is loaded on the Creel. Then the Lycra or Spandex is drafted to certain extent i.e. as per the requirement of quality. Then the Nylon/polyester & Lycra/Spandex is passed through the air jet where the covering takes place. Finally the covered yarn is wound on paper tube. 3) It is an admitted case that upto July, 2001, the assessees were themselves covering these yarns under Chapter No. 54 and paying duty accordingly. As per them, it was noticed that Custom Department was acquiring such yarns on importation under Chapter 56. The assessees were advised that the yarns in question are to be classified under Chapter No. 56 and not Chapter No. 54 and, therefore, after intimating the Department, they started ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... texturising, doubling, multiple-folding, cabling, air mingling, air texturing or any other process or any one or more of these processes, or the conversion of any form of the said products into another form of such products shall amount to manufacture." 7) Chapter 56 under which the assessees intend to cover their products, bears the heading "Wadding, Felt and Non-Wovens; Special Yarns; Twine, Cordage, Ropes and Cables and Articles thereof". The relevant entry under Heading No.56.06 reads as under: Heading No. Sub-heading No. Description of goods Rate of duty Basic Additional 56.06 5606.00 Gimped yarn, and strip and the like of Heading No. 54.04 or 54.05, gimped (other than those of Heading No. 56.05 and gimped horsehair yarn); Chenille yarn (including flock chenille yarn); Loop wale yarn 16% 8) Mr. Lakshmikumaran, learned counsel appearing for the assessees, submitted that, no doubt, Note 3 of Chapter No. 54 stipulates that the process of air mingling is also included in Chapter No. 54. His submission, however, was that this air mingling refers to the situation where same yarn is used. He argued that when two different kinds of yarns are used in the air ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that two yarns are used in the manufacture of the product, namely, Nylon and Lycra. At the same time, however, it is also an admitted fact that in Polyester Covered Yarn, the percentage of Lycra is only nine to ten and it is Polyester/Nylon which is pre-dominantly used ranging from 91% to 93%. Taking note of these facts and definition of gimped yarn in Explanation (A) to Chapter Heading 56.00 under Section XI of Explanatory note to HSN, it was stated in the show cause notice that the product could not be treated as gimped yarn. This process which is mentioned in the show cause notice in detail, and the factual position contained therein was not disputed by the appellants, reads as under: "5. Whereas it further appear that as per the technical details of the machineries involved in the manufacture of said polyester/nylon covered yarn that the Polyester/Nylon yarn is not wound spirally on the Polyurethane (elastomeric) yarn i.e. Lycra or Spandex that the Polyester/Nylon Texturised yarn forming the loop in relaxed condition is not wrapped around the polyurethane (elastomeric) yarn i.e. Lycra or Spandex or held in place by a binder or tie yarn that both the Polyester/Nylon texturise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Air mingled yarns manufactured by M/s. Sarla Polyester Ltd. comprise a Polyester Yarn (Polyester) or Nylon Yarn (Polyamide) air mingled with Lycra/Spandex (polyurethane). The assessee using lycra or spandex as core yarn and covering the same with polyester or nylon yarn, a non elastic multi filament yarn of Polyester/Nylon is fed through an air jet with stretched lycra/spandex. In the air jet, due to compressed air, the filaments of polyester/nylon get intermingled with that of Lycra/Spandex. The resulting yarn would therefore merit classification based on the principle of pre-dominance of textile material used. Since the air mingled yarn contain more polyester or nylon by weight vis-a-vis Lycra/Spandex such yarns merit classification under Chapter Sub Heading No. 5402.61 or 5402.62 as Synthetic Filament Yarn of Nylon or Polyester respectively. This classification is decided by virtue of Section Note 2(A) to section XI covering chapter 50 to 63 of the first schedule to Central Excise Tariff Act, 1985. Since M/s. Sarla Polyester Ltd., Silvassa are having intermingling machinery at their manufacturing unit, they are adopting the intermingling/interlacing process for covering lycr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged or disputed by the assessee, the polyester or Nylon yarn did not wound spirally and even did not wrapped around the Lycra/Spandex (elastoemeric) yarn or it was not held in place by a binder or tie yarn. It was merely attached with each other due to pressurized air by way of technique of intermingling. Therefore the yarns in question cannot be said to be composed of core of yarns. And as such it is not gimped yarn." 15) The Appellate Authority while affirming the order of the Assessing Officer also referred to Rule 3(a) of the Rules of Interpretation as per which the heading which provides the most specific description is to be preferred to the heading providing a more general description. The Tribunal has revisited the entire issue taking into consideration all the aspects of the matter and in the light of tests reports of MANTRA, affirmed the findings of the Authorities below that the products manufactured by assessees are nothing but air mingled yarn and, therefore, cannot be classified under Chapter No. 56 in view of the fact that it does not contain a core around which another yarn has been woven. Thus, a categorical finding is arrived at that the core does not itse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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