Judgment:
The appellant is a small scale unit engaged in the manufacture of water proof canvass cloth/water proof processed cloth. The appellant claimed the clarification of the said product under chapter 52 of the CETA along with benefit of exemption notfn. no. 175/86. However, the Revenue entertained a view that the cotton fabrics quoted with water-proof material i.e. wax are properly classifiable under heading 59.06, as per Board's circular No. 6/91-CX 1, inasmuch as there was a visible layer on the fabric. As heading 5906.90 was not specified heading for the annexure of small scale notfn.no.175/86, the appellants were issued a show cause notice for confirmation of demand of duty on the said fabric for the period 1.9.88 to 31.1.93. The said show cause notice culminated into the impugned order passed by the Commissioner of Central Excise, Bhubaneswar confirming the demand of duty of Rs. 35,80,522/- (rupees thirty five lakh eighty thousand five hundred twenty two) against the appellant, imposing personal penalty and also confiscating the seized fabrics with an option to the appellant to redeem the same. The said order of the Commissioner is impugned before us.
2. We have heard Shri A.K. Bandhopadhyay, ld. adv. for the appellant and Shri D.K. Bhowmik, ld. JDR for the Revenue.
3. The process of manufacture as given in the show cause notice is as under:- "The canvas favrics is dipped in a paraffin wax based mixture and whereafter it is calendered between two rolls in order to squeeze out the excess quantity of sticking paste and to produce a coated fabrics of uniform thickness. So far the visibility of the resulting coating is concerned, it appears from the physical examination of the base fabric and the resultant product that processing done on it was resulted in formation/generation of a 'Coat' of the material applied, which is visible to the naked eye. Even going by simple reasoning, it appears that only by formation of a water resistant 'layer' or 'coating' on the fabrics its water proofing characteristics can be generated." 4. Shri Bandhopadhyay's contention is that the issue in question is covered by the earlier decision of the Tribunal in the case of Modi Enterprises-2001 (131) ELT 75 (T), holding the goods as classifiable under heading 5207.00. Shri Bhomik also accepts the above legal position. In the case of Modi Enterprises, referred supra water-proof fabrics were held to be classifiable under sub-heading 5207.00 of CECA, 1985, by following the earlier decision of the Tribunal in the case of Ratan Tarpaulin Water-proof-2000(116) ELT 782(T), the Revenue's contention that the goods are classifiable under chapter 59 being coated fabrics was not accepted. The process of manufacture as discussed in the said case is an identical to the one used by the appellant. As such we find that the ratio of the above two decision is fully applicable to the facts of the instant case. By following the same we set aside the impugned order and allow the appeal with consequential relief to the appellants.