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TMI Blog2009 (5) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... is drafted as per the required quality as passes through the hollow spindle. The Nylon/Polyester is twisted over the drafted Lycra/Spandex where covering process takes place. The final covered yarn is wound on the tube or cone. Process of Air Covering - M/C - SSM DP2-C 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. 2. Prior to July, 2001 the appellants were affecting the clearance of above yarn under Chapter No. 54. However, the appellants noticed that such yarn on importation was being cleared by customs dept. under Chapter 56. The appellants therefore sought clarification and were advised that the impugned yarns being type of covered yarn merits classification under Chapter No. 56 which is the appropriate Chapter for covered yarn. Accordingly, the appellants after intimating the department started effecting the clearances under CSH No. 5606.06 as against CSH No. 5402.62/61 with effect fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also explained new manufacturing process and also showed the samples. In conventional process there is a core yarn which can be nylon or polyester and lycra and nylon/polyester is twisted over the drafted lycra/spandex. In the new technology nylon/polyester and lycra/spandex is passed through the air jet and the air jet facilitate covering. It is his submission that both types of yarns have the same application namely manufacture of socks etc. He also drew our attention to HSN Explanatory notes under sub-heading 56.06 under which covered yarn is proposed to be classified. The explanation given below the heading is "These products (Gimped Yarn) are composed of a core usually of one or more textile yarn or yarns around which other yarn or yarns are wound spirally. Most frequently the covering threads completely cover the core but in some cases the turns of the spiral are spaced; in the latter case, the product may have somewhat the appearance of certain multiple (folded), cabled or fancy yarns of Chapters 50 to 55, but may be distinguished from them by the characteristics of gimped yarn that the core does not itself under to a twisting with the cover threads. It is his submission tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 3 of the Act. The appellants submit that the said purported findings of the Commissioner nullifies the very judgment of Hon'ble Tribunal in case of M/s. Futura Polymers Ltd. inasmuch as based on the said findings the demand was set aside by the Tribunal for the period prior to 6-2-2001 i.e. the period prior to issue of revised circular CBE&C. It was therefore submitted that the Commissioner has not at all applied his mind on the legality involved and passed the impugned order on baseless and irrelevant findings. 9. Learned JCDR on the other hand drew our attention to the report of MANTRA (Man made Textile Research Association), wherein association in their test reports stated that Texturised Polyester yarn is not wound spirally on the Polyurethane yarn. Polyester/Nylon texturised yarn forming loops is not wrapped around the Polyurethane Yarn or held in place by a binder or tie yarn. Polyester texturised yarn and Polyurethane yarns are attached to each other by a new technology of yarn covering by application of pressurized air in the path of both the Polyester Texturised Yarns and Polyurethane Yarns similar to the technique of intermingling. Similar is the observation about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Tariff Act, 1985. Accordingly they were well aware about the nature of their goods die to its process, thereby they were having the complete knowledge of its proper classification under Chapter sub-heading 54.02 of Central Excise Tariff Act, 1985. Even after declaring the change in classification of said goods, they still continued to describe these goods as intermingled yarn and not the covered yarn or gimped yarn, which lead to belief that to pay the less duty they deliberately resorted to the wrong classification of the said goods by way of well thought plan. Further, they were well aware about the provisions of Section 3 in relation of duty payment for the goods manufactured by 100% EOU's. However, looking to the benefit in payment of duty on the goods cleared in DTA by them, they willfully resorted to the inconsistent method of calculation of duty @ 50% of concessional rate of duty. Thus, there is suppression of facts and willful mis-statement/mis-declaration on their part which is proved beyond doubt. 12. It is quite clear from the above that the appellants had brought all the facts to the notice of the department and the department was aware of the technology ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with any relevant Notification issued under Rule 8 of Central Excise Rules, 1944 or Section 5A of the Central Excise Act. Rule 8 of Central Excise Rules and Section 5A of the Act apply only to Central Excise duty and if the rate is to be determined by considering the rate in the Schedule with relevant Notifications, the obvious conclusion would be that it is only the Central Excise duty. Ld. Advocate also cited Circular No. 554/50/2000-CX., dated 19-10-2000 issued by the Board in support of his contention. Even though the circular discuss the Notification No. 8/97-C.E., dated 1-3-1997, the principles are applicable. We find considerable force in the arguments advanced by the ld. Advocate that the duty payable on the products under consideration would be aggregate of 50% of each type of Customs duty payable or excise duty payable on like goods as provided in the proviso, which-ever is higher upto 1-3-2002. After 1-3-2002, the rate of duty applicable would be 50% of the aggregate duty of the Customs or excise duty payable (sic). Commissioner for reconsideration the matter as regards to duty payable under Notification No. 2/95-C.E., dated 1-3-95 after taking into consideration th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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