TMI Blog2009 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... does not cease to become jute carpet - the most specific description shall be preferred to the heading providing a more general description – Decision of the Tribunal upheld. - 7075-7076 OF 2005 - - - Dated:- 8-9-2009 - D.K. JAIN and ASOK KUMAR GANGULY, JJ. [Judgment per GANGULY, J.] - Along with this appeal other appeals were heard together. There are some common questions but factually this case is different from other cases. So this judgment will govern these two appeals. 2. The respondent in these two appeals are manufacturers of carpets by interlacing yarns of three different types, namely, jute, cotton and polypropylene. It is the case of the respondent-company that in the carpets which it manufactures jute always predominates by weight over each of the other single textile material. 3. In the case of M/s. Champdany Industries Limited, at an earlier stage of the proceedings an order was passed by the Commissioner (Appeals) on 27.06.1995, whereby the Commissioner (Appeals) remanded the matter to the original adjudicating authority to decide whether the carpets manufactured by M/s. Champdany Industries Limited have separate base fabric. The Commissioner found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period from December 1991 to May 1999. 9. Respondent-company, however, disputed the said contention of the Revenue and an adjudication order was passed on 26.11.1999 by the Assistant Commissioner. In the said order, the Assistant Commissioner accepted the reports referred to hereinabove and also accepted the position that in those carpets jute predominates by weight over each other single textile material and those carpets do not have any base fabric. In spite of the aforesaid position, the Assistant Commissioner relying on Chapter Note 1 of Chapter 57 held that those carpets cannot be classified as jute carpets but they are polypropylene carpets. 10. Against the said order dated 26.11.1999 the respondent-company filed an appeal before the Commissioner (Appeals) and the Commissioner (Appeals) by an order dated 13.03.2000 allowed the appeal. In the said order, the Commissioner (Appeals) held that the interpretation of the Assistant Commissioner of Chapter Note I of Chapter 57 was not correct and the Commissioner (Appeals) came to a conclusion that as per the Section Notes any product which contains two or more textile materials are to be classified as consisting of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, the Tribunal held that such carpets were clearly classifiable as jute carpets as the test of predominance of jute over other single textile material is the deciding factor for classification purposes. 15. Admittedly, the case of the Revenue is that the product falls under Chapter 57 and it contains two or more textile materials. In fact that is the case of the Revenue in the Show-cause notice and in the order of the Assistant Commissioner. 16. The necessary corollary from the aforesaid stand of the Revenue is that once the goods are falling under Chapter 57, Chapter Note 1 to Chapter 57 becomes relevant. The said Chapter Note is set out below: "For the purposes of this Chapter, the term `carpets and other textile floor coverings' means floor coverings in which textile materials serve as the exposed surface of the article when in use and includes article having the characteristics of textile floor coverings but intended for use for other purposes." 17. The Revenue also placed reliance on the said Chapter Note. In fact the Revenue wanted to classify the said carpets as otherwise than jute carpets by relying on the said Chapter note. 18. In our view the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Section Notes 2(A) and 14A for the period between 1994-1995 and Section Note 2(A) read with sub-heading Note 2(A) thereafter, the inter-se classification has to be done under different headings and sub-headings. 24. Since the goods admittedly fall under Chapter 57 and consist of more than two or more textile materials, it has to be classified on the basis of that textile material which predominates by weight over any other single textile material. As in the goods in question jute admittedly predominates by weight over each other single textile material, the said Carpet could only be classified as jute carpets and nothing else. 25. This Court finds that this logic and reason is in consonance with the interpretation of the Chapter Note, Section Note and the sub- headings. The contrary interpretation given by the Revenue is not correct. In fact the Revenue wanted to classify the carpets under the residuary sub- heading 5702.90 of Heading 57.02. Both Headings 57.01 and 57.02 are set out below: "57.01 Carpets and other textile floor coverings, knitted, woven, tufted, or flocked, whether or not made up (excluding dari, sataranji, namdahs, jute carpe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exemption Notifications issued by the Government, the stand of the Revenue cannot be sustained. 31. Apart from that the revenue's stand in this case is contrary to the decision of this Court in HPL Chemicals Ltd. Vs. Commissioner of Central Excise, Chandigarh - (2006) 5 SCC 208. Commenting on the reliance placed by the Revenue on the residuary item in Heading 38.23 (renumbered 38.24), this Court observed that the CEGAT erred in relying on the residuary article by reading the residuary heading as if it was specific heading. This Court observed as under:- "31. ...In the present case since the goods were covered by a specific heading i.e. Heading 25.01, the same cannot be classified under the residuary heading at all. This position is clearly laid down in Rule 3(a) of the Interpretative Rules set out above. As per the said Interpretative Rule 3(a), the heading which provides the most specific description shall be preferred to the heading providing a more general description..." 32. In coming to the said conclusion, this Court relied on an earlier three-Judge Bench decision of this Court in Dunlop India Ltd. Vs. Union of India and others - (1976) 2 SCC 241, para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the mere fact that the surface of the carpet is polypropylene fiber, it does not cease to become jute carpet. So this Court is constrained to hold that this argument by the Revenue on the basis of surface or essentiality test is erroneous. 38. Learned counsel for the Revenue also argued that the common parlance test should be applied for classifying the carpets as the carpets to the common man would not appear to be jute carpet but polypropylene carpet. 39. In Collector of Central Excise, Hyderabad Vs. Fenoplast (P) Ltd. (II) - 1994 (72) ELT 513 (SC), a three-Judge Bench of this Court held that while interpreting statutes like the Excise Tax Acts or Sales Tax Acts where the primary object is to raise revenue and for such purpose the various products and goods are classified, the common parlance test can be accepted, if any term or expression is not properly defined in the Act "if any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted". 40. Going by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ominant intention of clause (a), the goods manufactured by the respondent- company can be classified, clause (b) and clause(c) of the said Rule need not be pressed into service. 48. Reference in this connection may be made to a three-Judge Bench decision of this Court in Commissioner of Central Excise, Nagpur Vs. Simplex Mills Co. Ltd. - (2005) 3 SCC 51. In paragraph 11 of the said report, the purport of the said Rule has been discussed. While discussing the said Rule, this Court held that the Rule having been framed pursuant to the powers under Section 2 of the Central Excise Tariff Act, 1985 is statutory in nature. Learned Judges also made it clear that for the purposes of classification primacy should be attached to the section and chapter notes along with terms of the headings. If on application of Section and Chapter Notes, `no clear picture emerges' then only can one resort to those rules. 49. In the instant case from the above discussion, it is clear from a perusal of the Chapter and Section Note, that the goods manufactured by the respondent-company can be classified as jute carpets/jute floor coverings. Thus, the argument on behalf of the Revenue cannot be ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22.2.1986 with Section Notes, Chapter Notes, Headings and sub-headings. Therefore, the ratio in Novopan (supra) has no relevance in the facts of the present case. 57. Learned counsel also relied on the decision of this Court in Hindustan Poles Corporation Vs. Commissioner of Cental Excise, Calcutta - (2006) 4 SCC 85. In fact the judgment in that case does not at all advance the case of the respondent. In paragraph 39 of the judgment it has 3 been held that the residuary entry is meant only for those categories of goods which clearly fall outside the ambit of specified entries and unless the Department can establish that the goods in question can, by no conceivable process of reasoning, be brought under any of the tariff items, resort cannot be had to the residuary item. 58. Following the said principle, as we must, in the instant case, the goods manufactured by the respondent-company fall clearly under the specified items as discussed above. 59. Revenue also relied on another decision of this Court in Kemrock Industries Exports Ltd. Vs. Commissioner of Central Excise, Vadodara - (2007) 9 SCC 52, for the purpose of essentiality test. As noted above, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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