Judgment:
1. Appellant, a manufacturer, inter alia, of yarn consisting of 48% Polyester, 48% viscose and 4% Flax or Ramie, filed classification list for the same, claiming its classification under sub-heading 5504.22 which was approved by the Assistant Collector. The Assistant Collector later issued a show cause notice asking them to show cause why the said product should not be classified under sub-heading 5504.29. This was replied to by the appellant stating that the goods were classifiable under 5506.29. The Assistant Collector passed his order classifying the yarn under sub-heading 5506.29. The order received by the Collector was felt to be not correct and proper and on his authorisation an application was filed before the Collector of Central Excise (Appeals) for setting aside the order passed by the Assistant Collector contending that the correct classification of the subject yarn was 5504.29 attracting duty of Rs. 26.40 per kilogram. After considering the contentions raised in reply by the assessee (appellant herein) by way of a cross-objection the Collector (Appeals) allowed the department's appeal and set aside the Assistant Collector's order. The order-in-appeal passed by the Collector (Appeals) is under challenge in the present appeal.
2. Shri Prakash Shah, learned Advocate, appeared for the appellant. He submitted that Heading 55.04 would apply only if polyester staple fibre predominated in the yarn. In the subject product polyester does not predominate and hence the heading decided by the Collector (Appeals) is not applicable. He contended that Section Note 2(c) of Section XI of the Excise Tariff has been wrongly applied by the Collector (Appeals) to decide the classification. That clause will have to be considered only if there is a conflict in classifying the goods as between two chapters. Here there is no such dispute. Both the classifications involved are under the same chapter. In such a case Chapter Note 2(c) is not to be invoked, he contended. He pleaded that the appeal be allowed on the above ground. No other ground was pleaded.
3. In reply Shri Satnam Singh, Departmental Representative stated that Chapter Note 2(c) is squarely applicable. He referred to the said Note and stated that when two or more fibres or yarn are equal in weight, then the fibre or yarn which attracts the higher rate of duty payable shall be the predominant yarn and the yarn shall be classifiable under the heading applicable to such yarn. He supported the impugned order.
4. We have considered the rival submissions. We have perused the record. We find that the Collector (Appeals) has decided the matter correctly and the application of Section Note 2(c) of Section XI was in order. The yarn in question consisted of 48% each of Polyester and viscose, apart from 4% flax or ramie. Neither Polyester nor viscose predominated as a single constituent. In the circumstances, Section Note 2(c) of Section XI comes into play. This laid down that where two or more of the specified fibres or yarns (which included polyester and viscose) are equal in weight in any yarn then one of those fibres or yarns, the predominance of which would render such yarn fall under that Chapter or heading (emphasis added) which read with the relevant Notification, if any, attracts the higher or highest amount of duty payable shall be deemed to be predominant in such yarn and such yarn shall be allowed to fall under the applicable Chapter or heading as the case may be (emphasis added). It is thus clear that the yarn attracting the higher duty will decide the classification when the product consists of equal percentage of two varieties of yarn or fibre. This will be for such classification under a Chapter or Heading as the case may be. We see no merit in the submission that this criterion is only to decide the classification as between two Chapters and that it has no application when the competing classifications are under the same Chapter. The words employed in the Section Note clearly indicate that its scope is not limited to disputed claims regarding the appropriate Chapter but extends to such disputes involving Headings within the same Chapter also. Accordingly, we uphold the finding of the Collector (Appeals) in favour of Tariff sub-heading 5504.29 as against 5506.29.
The appeal is dismissed.