Judgment:
1. In the impugned order the ld. Collector (Appeals) held that the order of the Assistant Collector is sustainable in law. The Assistant Collector in the order had held that the processed fabrics in dispute were classifiable under Heading 5804.12 and not under chapter Heading 6001.12. Being agrieved by this order, the appellants have filed this appeal.
2. The facts of the case in brief are that the appellants are the processors of knitted textile fabrics. They procured woven/knitted fabrics from the market and processed them. A dispute arose whether the fabrics were lace or knitted/fabrics. The appellants claimed that the fabrics were knitted fabrics classifiable under Chapter sub-heading 6001.12 whereas the Department held that the fabrics were lace and were classifiable under Chapter sub-heading 5804.12.
3. The Department relied upon the test report of the Deputy Chief Chemist who opined that the fabrics appeared to be lace. The Commissioner (Appeals) while deciding the issue relied on the technical literature also and stated that the appellants claim that because the goods were produced at a raschel knitting machine, they cannot be lace is also contradicted by the definition of raschel lace. He held that the raschel knit machine is so versatile that it could be used for a wide variety of fabrics, ranging from beautiful nets and laces to dress, suit.
4. Shri Gopal Prasad, ld. Counsel appearing for the appellants submits that the appellants had got the sample tested from SASMIRA for its expert opinion. He submits that SASMIRA in its opinion opined that the fabrics having regard to its width was knitted fabrics. He submitted that this opinion of the expert furnished by the appellants was not taken into consideration by the ld. Collector (Appeals). He submits that the Central Excise Tariff does not lay down any distinct definition either for lace or for knitted fabrics. However, HSN gives a detailed note for classifying the product as knitted product or lace product. He submits that HSN Notes were not taken into consideration by the lower authorities. He therefore prays that since HSN has clarified the issue setting out the process of distinction between knitted fabrics and laces, therefore, it could be considered by the lower authorities. He prays that the case be remanded to the authorities below to examine the samples of processed fabrics in the light of the Notes of HSN.5. Shri R.S. Sangia, .ld. DR submits that ld. Collector (Appeals) has examined the entire issue in depth including the expert report submitted by the appellants. He submits that the ld. Collector (Appeals) examined the chemical test report from Dy. Chief Chemist, expert opinion of SASMIRA as well as technical literature and came to the conclusion that the product processed by the appellant was lace. He submits that for lace there is specific entry under Chapter Heading 5804.12. Since there was a specific entry, therefore there was no question of going into general entry in Chapter Heading 6001.12. He submits that the appellants did not produce the expert opinion before the Assistant Collector who adjudicated the case nor was the issue of HSN raised before the authorities below. He therefore, submitted that there is no case made out for remand of the matter to the authorities below.
6. We have heard the rival submissions. We find that in the Central Excise Tariff, there is no definition provided for classification of laces as different from knitted fabrics. We also note that there is a difference of opinion between the two experts i.e. Deputy Chief Chemists from the side of Department and SASMIRA from the side of the appellants. We however, find that there is a detailed note on page 800 of HSN Explanatory Notes bring out the distinction between the lace fabrics and knitted fabrics. We find that the authorities below did not examine the matter in the light of the HSN Explanatory Notes above. In mis view of the matter, we consider it a fit case for remand.
Accordingly, we remand the papers to the ld. Assistant Commissioner to examine the samples of the processed fabrics of the appellants in the light of the Notes of HSN. Needless to say that the HSN has more than persuasive value after modelling of Central Excise Tariff on the pattern of HSN.