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TMI Blog2018 (9) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... classification of the impugned fabrics under CETH 5903, demand of consequential differential duty liability. These proposals were confirmed by the adjudicating authority. On appeal, vide an order No.14/98 (MDU) dt.22.01.1998, the Commissioner (Appeals) vide order dt. 22.01.1998 set aside the order of lower authority and directed him to go for retesting of the material on the basis of samples available and then pass a de novo order on the basis of results thereof and allowed the appeal by way of remand. Appellants further preferred appeal before CESTAT Chennai which was disposed of vide Final Order No.1828/98 dt. 16.09.1998 upholding the appellant's submission that Board's Circular No.5/89 dt. 15.6.89 should be taken into account while deciding the case. The Tribunal allowed the appeal by way of remand, inter alia ordering that remnant samples be tested for composition and that while taking a decision about the specific classification, the said circular also to be considered. Consequent to this CESTAT order, the de novo adjudication culminated in a Order-in-Original dt. 07.02.2011 reiterating the classification of the impugned fabrics under CETH 5903.90 and ordering that applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1989 conveying the fact and purpose of the said note 2(c). The circular also clarified that prior to 1.3.1989 textile fabrics partially or discretely coated with plastic will get covered under Chapter 52 to 55 depending upon the textile materials used whether cotton or man-made fabrics etc. ix) These Board clarifications will hold good even for the period after the Note 2(c) was deleted w.e.f 16.3.1995. x) After the deletion of Note 2(c) w.e.f. 16.3.1995, in view of certain doubts regarding classification of fusible interlining cloth, the Board issued a circular dt. 27.11.98. In that circular, it was clarified that omission of Chapter 2(c) was neither intended to nor resulted in changing the classification of fusible interlining cloth under Heading 5903. It was further clarified that classification of such fabrics under Chapter Heading 59.03 may thus be considered as an exception to Chapter 2 (a) (4) of Chapter 59 and that fusible interlining cloth would be appropriately classified under CETH 59.03 only. Appellants preferred a writ petition against the said circular dt. 27.11.98 to the High Court of Madras. The Hon'ble High Court vide judgment reported in 2004 (163) ELT 164 (Mad. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns (i) to (v) of Chapter Note 2(a) of Chapter 59 of the Tariff. However, the impugned fabrics do not bear any designs which are not resulting from the treatment of plastic coating. Hence impugned fabrics would only be classifiable under CETH 5903. iii) The tariff description and chapter notes will have primacy for the purpose of classification over circulars issued by the CBEC. iv) Even then as per the circular dt. 2.9.88 relied upon by the Ld. Counsel one of the requirements is that the fabrics should be "impervious" to justify classification in CETH 5903. v) However, the retest report dt. 6.4.2000, inter alia states that the samples of fabrics are not "impervious" to air and moisture. Ld. A.R drew our attention to para-8 of the impugned order where Commissioner (Appeals) has analyzed this very issue and has noted that it is incredible that cotton fabrics with plastic coating to the extent of 34% of the fabric weight are not impervious. Ld. AR also points out that there has been no test conducted to ascertain whether the impugned fabrics are impervious to liquids or otherwise. 4. Heard both sides and have gone through the facts of this appeal. 5.1 The issue that comes up for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will have to be taken into account while deciding the classification of such goods. We note that these circulars had been issued consequent to doubts raised regarding the classification of "Fusible Interlining Cloth". After examination of the issue and reference to "Complete Textile Encyclopaedia" Encyclopaedia of Textiles, and the Harmonized System of Nomenclature (HSN), the CBEC clarified that to merit the classification as coated fabrics under CETA 5903, three tests would require to be satisfied namely, * Should have a continuous and adherent film or layer or plastic on one side of the fabric surface * The fabric should be impervious * To satisfy the conditions prescribed in Note 2 of Chapter 59. The telex dt. 30.9.89 reiterated the same basis except for removing the requirement of 'continuous' in the first test. 5.6 The introduction of Note 2 (c), in our opinion, was extended to widen the types of textile fabrics which could be brought under the fold of CETH 5903. Accordingly, notwithstanding Chapter 2 (a), even those textile fabrics "partially or discretely coated plastic" would now be classifiable under CETH 5903. However, such widened scope for includibility in CETA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.507 of 2005, that circular can no longer be used as 'litmus' for deciding the classification of the impugned fabric under Chapter 5903. 5.8 In the retest of the remnant samples caused pursuant to the earlier Tribunal order dt. 16.09.98, we find that sufficient clarity is found with respect to the characteristics of the samples so sent. In the report dt. 16.8.99 by the same authority, it has been certified that each of these samples received are having the following characteristics: (i) Coating on the fabric is visible with naked eye in each case. (ii) Each sample without fracturing, bends manually around a cylinder of diameter 7 mm at a temperature between 15o C to 30o C. (iii) In each sample, textile fabric is neither completely embedded in plastic nor entirely coated on both sides with plastic material and coating in each sample is visible with naked eye. (iv) In each case there is no design from the discrete coating of plastic on the fabric. (v) Each sample is not in the form of plates, sheets or strips of cellular plastic combined with textile fabric, and the textile fabric of the sample is not present for reinforcing purpose. In respect of yet another sample, the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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