TMI Blog1996 (12) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 per cent. The petitioner appealed and the Collector (Appeals) by his order dated 16-7-1993 held that it must be classified as "Jute Carpet" chargeable at 5 per cent under Entry 5708.20. In October this year, the officers of the Department inspected the factory premises, took down some statements from the Managing Director and thereafter issued a show cause notice dated 6-11-1996 stating that the product has been wrongly classified as jute carpet and it should properly fall under the residuary item under sub-heading No. 5703.90 chargeable at 30 per cent. Simultaneously, another order detaining the goods manufactured by the assessee for securing a payment of duty was also issued. These writ petitions have been filed against the show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in use. In other words, only those floor coverings of jute where jute serves as exposed surface of the article when in use, would be eligible for the concessional rate of 5%." The learned standing counsel for the Department submitted that the heading in Chapter 57 specifically stated that the exposed surface of the article will be the criterion for classifying the goods and since the product manufactured by the petitioner did not contain jute as exposed surface, it cannot fall under item No. 5702.20, and accordingly, it will fall under residuary item No. 5703.90. He submitted that the Chapter heading is of greater significance than the Notes under the section. According to him, instructions given along with the budget proposals gave the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verings' 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." As can be seen from this Note at the top of the Chapter 57, it defines only the term 'carpets and other textile floor coverings' and does not deal with the manner in which a carpet made out of different textiles are to be classified. This situation is dealt in Note 2(A) in the section itself. Section 2(A) states as follows :- "Products of Chapters 56 to 63 containing two or more textile materials are to be regarded as consisting wholly of that textile material which would be selected under Note 2 above for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. This is the manner in which the appellate authority also decided the issue in the order made on 16-7-1993 which read as under : "Situation of this type are envisaged in the section notes and guidelines have been provided in the matter of classification of goods. Chapter 57 Note 1 only clarifies the type of goods that fall under this Chapter and Note 2 speaks of the goods which do not fall under it. To use that definition (wrongly at that) to sub-classify goods under the Chapter when the section notes are clear as to the manner in which goods consisting of more than one material should be classified is erroneous. The assistant Collector is directed to classify the type of goods in question after taking note of the chemical examiner's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has no jurisdiction under Section 11-A to issue a show cause notice for reclassifying the goods. 7.The learned Standing Counsel submitted that if the Department is not allowed to review the classification, there will be loss of revenue as the earlier classification will stand without any modification. This is the very argument which was considered by the Supreme Court and rejected. The cases cited by the learned Standing Counsel are the cases where reclassification was made without there being an appellate adjudication and are therefore, irrelevant. In the present case, in the face of the appellate adjudication earlier on the same facts and in the admitted position of there being no change in the law, the issue of show cause notice is b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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