1. Short question involved in both these appeals is whether the Rexine cloth manufactured by the respondent company herein falls under Tariff Item 19-III CET. The original authority based on the definition of cotton fabrics in T.1.19 CET has held that the aforesaid product falls under T.1.19-111. The lower appellate authority has not held the product as falling under that T.1.19-III. He has, however, not pointed out any alternative tariff entry under which item it falls. Hence this appeal by the department.
2. Since a common question, as aforesaid, is involved in both the appeals a common order is being issued. Facts as given in the appeal of the department are as follows: The respondent company have two units. Both the units manufacture coated fabrics popularly known as 'Rexine Cloth' in the market. In the first instance the company obtained licence for both the units for the manufacture of goods under T.1.19-111. They filed the classification list accordingly. They however by their letter dated 9.3.81 contended that the product does not deserve to be classified under Tariff Item 19-III Thereafter they went in writ-petition to the High Court of Andhra Pradesh on 2.4.81. On the insistence of the department, however, they filed another classification list hi respect of then- product under T.I.19-III vide their letter dated 18.4.81 under protest subject to their letter of objection dated 9.3.81 and writ-petition filed before the Andhra Pradesh High Court on 2.4.81.
2.1. In the meantime the Andhra Pradesh High Court gave an interim stay order to the department not to collect any excise duty by the respondent company subject to furnishing of necessary bank guarantee.
The company furnished 100% bank guarantee as per High Court's directions and cleared the goods. The Andhra Pradesh High Court decided the writ petition by remanding the case to the department with a direction that an opportunity be given to the respondent company to represent their case and take a decision according to law. It was also directed that the company's objections raised in their letter dated 9-3-1981 should also be taken into consideration while deciding the matter.
2.2. In the light of aforesaid directions, show cause notices were issued and the company was also given an opportunity to represent their case in person on 22-4-1987.
3. It is admitted that the company purchased cotton fabric in the market and then coats it with a formulation of PVC resin, plasticizer etc. Final composition of the rexuie cloth according to the impugned order is as follows :-(1) Cotton fabrics 8.0%(2) PVC Resin 24.5%(3) Plasticizers (DIP/DIOP/BBP) 13.0%(4) Other [Fillers, (Calcium Carbonate) Secondary 54.5% Plasticizers, Pigments, Solvents, Thinners, Foaming Agents] 3.1. The impugned order has upheld the contention of the respondent company that the rexine cloth of the aforesaid formulation is not cotton fabric. The lower appellate authority has based its decision on the Supreme Court judgment in the case of Multiple Fabrics 1987 (29) ELT 481 (S.C.). We shall advert to the judgment of the Supreme Court while discussing in detail at a later stage. He has also relied upon other decisions cited by the appellant namely :- (iv) 1987 (65) STC 75 (All.) - CST v. Habib Khan (v) 1983 (13) ELT 1216 - International Conveyor v. CCE According to the said authority these decisions indicate that when due to coating or impregnation or lamination the end-product ceases to be cotton fabric known in the trade as such, it is not possible to hold that such resultant product is classifiable under the then Tariff Item 19-111 of CET.32. "Lastly", he says that, "cotton fabric is defined in Item 19 of Schedule I of Central Excises and Salt Act, 1944 being all varieties manufactured from cotton". "The word fabric according to Concise Oxford Dictionary", argues the lower authority, "means woven material, texture often textile fabric". In view of this definition the learned Collector (Appeals) finds that "It cannot be said that rexine is woven material, though woven material namely cotton fabric is used as raw material for the manufacture of rexine." He, therefore, decides that the rexine cloth under consideration does not get classified under T.1.19-III. He does not, therefore, discuss other points and thus allows the appeal.
(i) The lower appellate authority has erred in holding that only in cases where cotton fabric is subjected to coating and impregnation and even after such treatment the cotton fabric is identifiable as cotton fabric, the same will fall under T.1.19-111; if however the cotton fabric does not remain cotton fabric after coating and impregnation, it will fall outside the scope of the Tariff' Item. In other words the Appellant Collector states that the lower appellate authority has gone wrong in classifying rexine on the basis of trade parlance alone despite the specific definition of cotton fabric given in the subject Tariff Item.
(ii) Tariff definition or description of cotton fabric in Tariff Item 19-III leaves no doubt that in case of coated fabric predominance of cotton or percentage of cotton in blended cloth has to be seen with reference to the base fabric. He submits that it is a well established law that the statute can provide definite description/definition for a product, even if the same is not in consonance with the trade parlance.
(iii) Supreme Court's judgment in case of Multiple Fabic is not applicable in the instant case because in that case coating on fabric with PVC compound was done in a continuous manner. Existence of fabric came simultaneously with coating with PVC compd. Further the end-product in that case was a commercially known distinct item i.e. conveyor belting. It was not known as coated man-made fabric.
In the instant case rexine is known as rexine cloth or artificial leather cloth and it has all the qualities of a fabric like flexibility etc., which a fabric is supposed to have.
5. Learned SDR while reiterating the aforesaid grounds of the Appellant Collector relies upon the following judgments of the Tribunal and the High Court in support of the classification of the goods under T.1.19-111:- (i) 1984 (18) ELT 569 (Tri.) - Lakshmi Card Clothing Mfg. Co. (P) Ltd. v. CCE 6. Apart from the forgoing learned SDR has submitted that acceptance of the impugned order would imply that the rexine cloth would be without any classification under the CET. This cannot be allowed to be so. A proper classification, therefore, is to be found out. She points out that there is another Item 22(B) which speaks of coated textile fabrics. There is no dispute whatsoever that the process undertaken by the respondent company is that of PVC coating on the base cotton fabric. Item 22(B) which reads as follows :- "22(B). Textile fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials, not elsewhere specified" would cover this item inasmuch as this entry does not speaks of predominance of any textile fabric. If this classification is also not accepted, then the classification under T.I. 68 which covers goods not elsewhere specified would in any case cover the product of the respondent company. She states that a proper classification of the product must be found out because it is nobody's case that the process undertaken by the respondent company is not a process of manufacture of some goods.
7. Learned Advocate for the respondent company Shri V. Lakshmikumaran, on the other hand while repeating the arguments of the lower appellate authority states that the new classification sought to be advanced by the learned SDR under T.1.22(B) is not correct, firstly because this was never the case of the lower authority and a new case cannot be advanced at this stage and secondly, 22(B) speaks of impregnated coated textile fabrics which are not elsewhere specified. Since coated impregnated cotton fabrics are specified elsewhere in 19-III, T.I.22(B) would not cover coated cotton fabrics. This item, according to the learned Advocate, would cover coated fabrics of other textiles such as jute, wool or silk fabrics. As regards classification of T.1.68 learned Advocate submits that while he would not have any dispute with the classification of the product under that item, a question would arise whether the respondent company would be eligible for certain exemption notifications therein or not. In case the Tribunal, according to him, comes to a finding that the classification falls under T.I. 68, then the matter should be remanded to the lower authorities to redetermine the liability, if any, in accordance with law so that the respondent could put forward their case for exemption under suitable notifications.
8. We have carefully considered the pleas advanced on both sides. The main question for consideration, as already pointed out, is whether the rexine cloth manufactured by the respondent company by the process of coating of a PVC formulation on base cotton fabric is covered by T.I.19-III or not. In order to appreciate the controversy it is appropriate to reproduce the relevant portions of the definition of cotton fabric given in T.1.19 :- "19. COTTON FABRICS - 'Cotton Fabrics' means all varieties of fabrics manufactured either wholly or partly from cotton and includes...fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials...if (i) in such fabrics cotton predominates in weight or (ii) such fabrics contain more than 40 per cent by weight of cotton and 50 per cent or more by weight of non-cellulosic fibres or yarn or both: Provided that in the case of...fabrics impregnated, coated or laminated with preparations of... such predominance or percent- age, as the case may be, shall be in relation to the base fabrics which are...impregnated, coated or laminated or covered....
III. Cotton fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials.
9. It is thus apparent that cotton fabric has been defined in a particular manner in T.1.19. In the main portion of the definition as reproduced above a fabric is to be taken as cotton fabric under T.1.19 if in such fabric, cotton predominates in weight but an exception has been provided to this definition in the case, inter alia, of impregnated, coated or laminated fabric and such predominance (i.e.
predominance of cotton) has to be determined in relation to the base fabric.
9.1. It is a settled principle of law that when a product is specifically defined in a fiscal entry or in a statute itself it has to be construed according to that particular definition. This principle has been recently reiterated by the honourable Supreme Court in the judgment of Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co. 1988 (37) ELT 480 (SC). Para 8 of the said report is reproduced as follows :- "It is well-settled, as mentioned before, that where no definition is provided in the statute itself, as in this case, for ascertaining the correct meaning of a fiscal entry reference to a dictionary is not always safe. The correct guide, it appears in such a case, if the context and the trade meaning. In this connection reference may be made to the observations of this Court in Commissioner of Sales Tax, U.P. v. Mis. S.N. Brothers, Kanpur (AIR 1973 S.C. 78) at page 80 Para 5." 92. In other words where a definition is provided in a fiscal entry for a particular commodity we have to go by that particular definition. In that case we are not required to go by the popular meaning given to the commodity by the persons who deal in the trade or industry with that commodity. In Para 4 of the report, 1981 ELT 325 (SC) this principle has been more clearly expressed as follows :- "If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in a common parlance or commercial parlance has to be adopted." This principle further emerges clearly in Tribunal's decision in the case of Indian Oil Corporation Ltd. v. Collector of Central Excise, Patna 1983 ELT 1009 (CEGAT). Para 10 of the report reproduced below from the said decision of the Tribunal makes the point clears :- "...We also find that Tariff Items 8,9 and 10 clearly define the respective oils coverd by them, by using the words, "that is to say, any mineral oil...", and thereafter laying down specific requirements as to smoke point, viscosity, carbon residue, colour, etc. These are in a sense deemed definitions and once these are satisfied, the respective products would necessarily fall within the respective Tariff Items. In this context the fact that they may not satisfy the specifications laid down by the Indian Standards Institution is not material. The goods covered by all these three Items are mineral fuels, and the fact that the subject goods had some use as mineral fuels is clear from the fact that they were being actually used as fuel in the refinery." We, therefore, have to see whether the product under consideration is covered by the definition of cotton fabric as reproduced above in T.1.19. We have also set out above the effect of proviso to the definition in the case of coated, impregnated or laminated fabrics with preparation of cellulose derivatives or of other artificial plastic materials. This definition in the proviso clearly sets at rest any doubt whether the predominance of cotton fabric has to be seen with reference to the base fabric or not in the instant case. Since it is admitted to both parties that the product under consideration is a coated fabric with PVC and other materials it would, therefore, be covered by the proviso to the definition of cotton fabric given in T.I.19. Proviso clearly states that in such instances predominance has to be ascertained in relation to the base fabric which is impregnated, coated or laminated. In the instant case, base fabric is undeniably 100% cotton fabric which is purchased by the respondent company from the market and then coated in its factory with a PVC formulation. This being so there can be no two opinions that the coated fabric manufactured by the respondent company would fall within the definition of the cotton fabric as given in T.I.19 and consequently the product under consideration would fall under T.1.19-111.
10. The respondent company has relied very strongly on Supreme Court judgement in the case of Multiple Fabrics 1987 (29) ELT 481 SC mentioned Supra. In order to examine the applicabilty of this judgment in the instant case we reproduce the factual position as recorded in Para 2 of the said report :- "The Tribunal has recorded a finding that P.V.C. compounding! was done simultaneously with weaving of the fabric from yarn which clearly indicated that the process of manufacture was conversion from yam to fabric as also the application of the P.V.C. Compound carried on at the same point of time. Learned Counsel for the appellants who initially attempted to challenge this fact was ultimately obliged to accept the situation as a finding of act. In fact before the Tribunal the departmental representative had relied upon this position as would appear from the judgment of the Tribunal." 11. After recording the factual position and the definition of the man-made fabric under T.1.22, findings of the Supreme Court are reproduced below in extenso :- "It is accepted that yarn is woven into fabric. Item 19 deals with cotton fabrics while Item 22 deals with man-made fabrics. On the footing recorded by the Tribunal, it is claimed that there was no preexisting base fabric and the manufacturing process simultaneously brought into existence the commodity by weaving yarn into fabric and application of P.V.C. Compound.
In view of the higher percentage of P.V.C. Compound in commodity, it becomes difficult to treat the ultimate goods as man-made fabrics for holding that it is covered by Item 22. Upon this analysis it follows that the Tribunal came to the correct conclusion when it held that the goods were not covered by Item 22 and, therefore, the residuary Item 68 applied. All these appeals are without any merit and are dismissed. Each of the respondents should be entitled to its costs." It is thus apparent from the aforesaid finding of the honourable Supreme Court that in the absence of preexisting base fabric and the peculiar manufacture process in that case which simultaneously brought into existence the commodity by weaving yarn into fabric and application of PVC compound that the honourable Supreme Court has adopted the criterion of predominance of PVC compound in the ultimate product. It is obviously so in view of the definition of cotton fabric given in T.I.19 and of man-made fabric in T.I. 22. When the base fabric as such does not come into existence before the process of coating started the question of determining pre-dominance of cotton or of man-made fabric with reference to the base fabric did not arise. It had to be necessarily determined therefore with reference to the final product.
12. In the instant case base fabric is very much in existence inasmuch as it is purchased by the respondent company from the market.
Therefore, in view of the peculiar definition of cotton fabric the percentage has to be determined with reference to the base fabric. In the aforesaid view the judgment of the Supreme Court heavily relied upon by the respondent company is of no avil to them. It is clearly distinguishable on the basis of facts.
13. Learned Advocate for the respondent company has also taken support from Tribunal's judgment in the case of International Conveyors Ltd., Aurangabad v. Collector of Central Excise, Bombay 1983 (13) ELT 1216.
Process of manufacture in the instant case is the same as in the case of Multiple Fabric as is apparent from the said report at Page 1223.
Here too, base fabric does not come into existence.
14. Learned Advocate has drawn attention to a judgment of Andhra Pradesh High Court, which is directly on this point, in the case of Insulation and Plastic Pvt. Ltd. 1988 (35) ELT 445. We observe that no doubt this is a judgment directly applicable to the product under consideration. We, however, find that the judgment merely follows the Supreme Court's judgment in the case of Multiple Fabric Co. discussed and distinguished above. Obviously, therefore, the judgment of Andhra Pradesh High Court does not apply to the facts of this case.
15. Other judgments relied upon by both the sides on the question of merits i.e. classification of the product are not considered necessary for discussion here inasmuch as they do not deal with the definition of the cotton fabric as given in T.I.19 as reproduced above. They deal with the definition of fabric pertaining to earlier periods or pertaining to sales tax entries which did not have the definition parimateria the definition under consideration here.
16. Another point made by the learned Advocate for the respondent company is that coating of the cotton fabric with the material in question namely PVC resin, plasticizer and others mentioned in Para 3 earlier would not amount to coating of cotton fabric with cellulose derivatives or of other artificial plastics. For this proposition learned Advocate relied upon the following citations :- (I) Industrial Plastic Corporation (P) Ltd. v. U.O.I. 1983 ELT 425 (Bom.) (II) Chemicals and Fibres India Ltd. v. Union of India 1982 ELT 917 (Bom).
16.1. We are unable to agree with this contention of the learned Advocate. There can be no doubt that the PVC formulation being used by the respondent company would certainly be covered by the expression 'other artificial plastics'. The judgment relied upon by the learned Advocate in the case of Chemicals & Fibres India Ltd., mentioned supra, supports this view. In Para 40 it has been clearly held that" whereas synthetic resin is a polymer itself, plastic is polymer plus such aditives as fillers, colorant plasticizers etc. There is no doubt, therefore, that what has been used by the respondent company is nothing but artificial plastics for coating of the cotton fabrics.
17. Next question raised by the respondent company is regarding the demand being hit by limitation inasmuch as no show cause notice of demand has been issued by the department. We are unable to deal with this point because we find that the question of demand did not arise in the order in original. It was merely a question on classification of product whether it fall under T.1.19-111. Therefore, this is a question which is required to be taken up separately by the respondent company and get a speaking order from the lower authority before the matter can be dealt with at our level.
18. In the result the appeal is allowed while setting aside the impugned order.
19. I have gone through the order proposed by my learned Brother but find myself unable to agree with the findings and the conclusions of the same. As very correctly recorded by him in the opening sentence of the order the short question involved in both these appeals is whether the rexine cloth manufactured by the respondents company herein falls under Tariff Item 19(m) GET. The basic facts have been taken note of by my Learned Brother in paragraph 3.
20. The admitted composition of the rexine cloth is that cotton fabrics constitute 8% and the rest 92%; namely, PVC Resin 24.5%, plasticizers 13% and others 54.5%.
21. The so-called rexine cloth which we are examining here was manufactured by the Respondent by the process of coating of PVC formulation on a base cotton fabric. Detailed arguments were advanced by Shri Lakshmi Kumaran that the so-called rexine cloth is not known as a fabric much less a cotton fabric in the commercial parlance. This submission of the Respondent is supported by three decisions of the High Courts, namely: 1. Saravanan Rexine v. Union Territory of Pondicherry - 1983 (54) STC 53 It appears to me that a line has to be drawn somewhere to treat a finished product as a textile. In the instant case cotton fabric contained in the finished product is 8%. To treat the finished product as a fabric, much less a cotton fabric would be incorrect. That is why the High Courts have decided that the so-called rexine cloth is not known as fabrics or textiles in the commercial parlance.Multiple Fabrics Pvt. Ltd., Calcutta v.Collector of Central Excise, Calcutta - 1984 (16) E.L.T. 301 (Tribunal), the Tribunal made some very important observations. In view of the similarity between Tariff Items 19 and 22 and because the departmental representative argued to the effect that if a fabric once came into existence and thereafter was impregnated, coated or laminated with plasic material it should be deemed to fall within sub-item HI of Item 22, the facts bear ample resemblance to the facts and issues in this appeal. The following extract of the judgment of the Tribunal is relevant both to the facts and issues and to the conclusions is reproduced below: "A point which was sought to be made by the learned Departmental Representative was that sub-item (3) of Item 22, which has been reproduced in para 19 above, refers to fabrics impregnated, coated or laminated with (plastic material). In fact his argument was to the effect that if a fabric once came into existence and was thereafter impregnated, coated or laminated with a plastic material, it should be deemed to fall within this sub-item, irrespective of the proportion of the plastic material or the nature of the final product. We do not find it possible to accept this argument. The wording of sub-item (3), as well as of the main item under which it appears, refers to "fabrics". The fabrics may have been impregnated, coated or laminated with plastic material, but they must still be capable or being called "fabrics". Impregnation, coating or lamination are all processes which upto a stage would leave the finished product still capable of being called a fabric. But when the proporation of plastic material reaches such a level that the final product does not retain the characteristics of a fabric, it would not, in our view, be proper or correct to treat this final product as an impregnated, coated or laminated fabric, merely because there is a fabric embedded inside it." I also note paragaph 5 of the Bombay High Court judgement Sheel Thermoplastics Limited and Anr. v. Union of India and Anr. 1988 (36) E.L.T. 106 (Bom). This paragraph is relevant to the present appeal as it examines the meaning of "Cotton fabrics" and also lays down that what needs to be considered is the final item as it emerges from the process of manufacture, it is reproduced below: "Does PVC leather cloth fall under Item 19 which is cotton fabrics" For the purpose of classification what needs to be considered is the final item as it emerges from the process of manufacture. The manner in which this item is manufactured is immaterial for the purpose of classification. This is so held by the Supreme Court in the case of Union of India v. Ahmedabad Manufacturing and Calico Printing Co. Ltd. , decided in 1985 (21) E.L.T. 633 (S.C.). In that case the Supreme Court was concerned with a fabric known as "Calikut Special" which contained 38.48% cotton and 61.52% artificial silk at the final finishing stage. At the intermediate stage this fabric contain 54% of cotton and 46% of artificial silk. The Supreme Court said that contents of the fabric at the final finishing stage after all integral processess had been completed is the basis for classification. The nature and character of goods at intermediate stage is irrelevant. It therefore held that the fabric was to be classified under Tariff Item 22 which deal with man-made fabrics and not under Item 19." 22. I agree with the well established proposition that where the statute provides a definition, we have to strictly go by the said definition. Going strictly by the definition of cotton fabrics given under Tarrif Item 19,1 cannot ignore the fact that in the finished product the cotton should predominate in weight. The proviso added to the main Tariff Item 19 cannot expand the scope of the main definition.
On the contrary the said proviso merely clarifies that where the base fabrics are themselves composite fabrics consisting of cotton, cellulosic or non-cellulosic fibres, the percentage or predominance in the base fabric has to be determined first. Once the predominance is determined on the base fabric and the base fabric is classified as cotton fabrics or man-made fabrics, the finished impregnated or coated textile fabrics would accordingly fall under Tariff Item 19 or Tariff Item provided in the finished textile fabric the non-textile components do not predominate. This was the view taken by the Tribunal in a number of decisions, namely: 3. Multiple Fabrics Co. Pvt. Ltd. v. C.C.E. Calcutta -1984 (16) ELT 301 23. The Tribunal's decision in the case of Multiple Fabrics Co. Pvt.
Ltd. has been confirmed in terms by the Supreme Court in the case of Collector of Central Excise, Calcutta v. Multiple Fabrics Company Private Ltd. In this judgment the Supreme Court examining the question of classification of P.V.C. Conveyor Belting observed as follows: "In view of the higher percentage of P.V.C. compound in commodity, it becomes difficult to treat the ultimate goods as man-made fabrics for holding that it is covered by Item 22. Upon this analysis it follows that the Tribunal came to the correct conclusion when it held that the goods were not covered by Item 22 and, therefore, the residuary Item 68 applied. All these appeals are without any merit and are dismissed. Each of the respondents should be entitled to its costs."Insulations and Plastics Pvt. Ltd. v. Assistant Collector of Central Excise and Ors.
1988 (35) E.L.T. 445 (A.P.) following the Supreme Court judgment in Multiple Fabrics Pvt. Ltd. examined the classification of coated fabrics. In paragraphs 5 and 6 the High Court observed as follows: (5) "We may first deal with this contention urged by the first respondent in the counter that the predominance of cotton is to be reckoned with reference to the base fabric and not with reference to the end-product. It is not denied that if the cotton contents is to be reckoned with reference to end-product and if it is less than 40% of the total weight then the products manufactured by the petitioner do not qualify to be classified as "cotton fabrics", within the meaning of Tariff Item No. 19(III). Our attention is invited to the decision of the Supreme Court in Collector of Central Excise v. Multiple Fabrics Pvt. Ltd. -1987 (2) SC 289. The question that arose for consideration in the above case was whether PVC Conveyor Belting manufactured by the assessee in those cases fell within the Tariff Item 22 or would be governed by the residuary entry 68 for purposes of excise duty under the Central Excise Tariff. The goods manufactured were chemically analysed and it was found that it is composed of synthetic resin of PVC type, reinforced with textile fabric containing 43.3% by weight of cotton and the rest viscose (man-made filament yarn of cellulosic origin). Thus the percentage of textile fabric in the end-product was found to be 43.3% while the percentage of PVC compound was found to be 56.7%. It may be pointed out that while Tariff Item 19 deals with "Cotton fabrics", Tariff Item 22 deals with "man-made fabrics". The provisions contained in both the Tariff Items are pari materia, and identical language in all respects is used in both the Tariff Items. The Supreme Court held that in view of the higher percentage of P.V.C. compound in the commodity being 56.7% it becomes difficult to treat the ultimate goods as man-made fabrics for holding that it is covered by Tariff Item 22. In that view the Supreme Court upheld the Tribunal's finding that the goods manufactured are not covered by Tariff Item 22, and, therefore, the residuary Item 68 applies. In view of the identical nature of the two Tariff Items, namely, 19 and 22, it must be held, following the above decision of the Supreme Court that, if the P.V.C. compound in the commodity constitute higher percentage than the basic cotton in the ultimate product, the goods manufactured by the petitioner company cannot be classified under Item 19. It is not possible to accept the suggestion made by the first respondent in the counter, that the predominance of cotton should be examined with reference to the base fabric and not the end product ultimately manufactured. Obviously, realising this position, learned Standing Counsel for the Central Govt. did not pursue that line of reasoning in the course of his arguments.
(6) According to these certificates the percentage of basic cotton in the ultimate product ranged between 14% and 15.6% while the percentage of PVC compound in the ultimate product ranged between 86% and 83.4%. It is not the case of the first Respondent that the certificate of analysis given by the Research Association are not acceptable. The objection raised by the first Respondent is that the percentage of cotton should be reckoned in relation to base fabric which is coated or laminated and not with reference to end-product, namely, cotton fabrics impregnated or laminated. In the counter filed it is specifically mentioned that the percentage of cotton must not be less than 40% with reference to the base fabric. It is urged in the counter that it is not the petitioner's case that the cotton content in the base fabric is less than 40%. Having made these claims it was finally stated in the counter that the certificates produced by the Petitioner suggesting that the cotton content in the goods manufactured by him is less than 40%, are totally irrelevant. According to the first Respondent, it is irrelevant because the cotton content should be reckoned in relation to the base fabric and not the end or ultimate product. Therefore, the dispute between the parties is only limited to the question whether the percentage of cotton should be reckoned in relation to the ultimate product or it should be reckoned in relation to the base fabric. As already observed above, this question has since been settled by the Supreme Court in Multiple Fabrics case referred to in para 5 supra. The Supreme Court held that the percentage should be reckoned with reference to the ultimate product. Once this controversy is resolved, there is nothing further that requires examination." 24. My learned Brother distinguishes the judgment of the Supreme Court in the Case Multiple Fabrics Co. on the ground that in that case the Supreme Court was considering the classification of the product where the emergence of the fabric and the conveyor belt was in a continuous process and that the fabric did not come into existence separately earlier. First of all, in my opinion this judgment of the Supreme Court cannot be distinguished. Secondly, if the Supreme Court was considering a product where the fabric did not come into existence at an earlier stage, there was no necessity of applying 'predominance test' at all, as has been done by the Supreme Court itself by looking at Tariff Item 19 or Tariff Item 22. In other words, where the base fabric never comes into existence, the question of treating the finished product as a coated or impregnated fabric under Tariff Item 22 would not have arisen in this first place. The Supreme Court applied the predominance test as appearing in Tariff Item 22 and held that the finished product is not classifiable under Tariff Item 22. The extracts of various judgments given in paras 22 and 23 (supra) are relevant in this context. The test of determining the classification of a product under Tariff Item 22 based on the predominance of the fibre content in the whole product is now a settled law. The case law extracted in paragraph 21 [Multiple Fabrics Co. (Tri.), (Supra); Sheet Thermo Plastics, Bombay High Court (Supra); Insulation and Plastics Ltd., A.P. High Court (Supra)], also make it clear that predominance is to be decided with reference to the final product and not the base product. This is the view of the Supreme Court in Multiple Fabrics Co. (supra). I, therefore, feel that the judgment of the Supreme Court in the case of Multiple Fabrics Co. Pvt.
Ltd. cannot (as done by my learned Brother) be distinguished at all, from the facts of this matter.
25. In any case, two High Courts namely Andhra Pradesh and Bombay in their judgments in (1) Insulation and Plastics Ltd. v. Collector of Central Excise, Hyderabad reported in -1988 (35) E.L.T. 445 (A.P.) and (2) Sheel Thermo Plastics Ltd. v. Union of India reported in 1988 (36) ELT 106 have decided the classification of an identical product, (coated fabrics), after applying the test laid down by the Supreme Court in the Multiple Fabrics case. These judgments are in consonance with the decision of the Tribunal referred to earlier. No contrary decisions of any High Court on the classification of an identical product have been brought to our notice. The product in question in the present appeals is the same as the one covered by the Andhra Pradesh High Court as well as Bombay High Court judgments. Under these circumstances I am of the view that we have to necessarily follow the decisions of the Supreme Court as also those of Andhra Pradesh and Bombay High Court. In the result I hold the so-called rexine cloth was not classifiable under Tariff Item 19.
26. One of the major grounds urged by the Appellant Collector and by the learned SDR before us is that the learned Collector (Appeals) had not decided the alternate classification. This cannot be a ground for setting aside the impugned order. If the assessing authorities can determine the alternate classification in accordance with law they are free to do so. As far as we are concerned, the Tribunal cannot empower an assessing authority to decide alternate classification of a product, if in law he cannot determine the same now. Also, the Tribunal cannot stop the assessing authority from determining the alternate classification of the product if he has powers to do so under the law.
Thus, the ground urged before us, that the Collector (Appeals) did not decide the alternate classification in the impugned order, does not survive. The Department is free to act, under the law, in this behalf.
27. During the course of arguments, the learned SDR pleaded that the alternate classification of the product is under Tariff Item 22B. As stated earlier, the finished product is not known as textile fabric as held by Madras and Allahabad High Courts. Tariff Item 22B covers textile fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other plastic materials "not elsewhere specified". Thus, the product has to be first a textile fabric to be covered under Tariff Item 22B. In the present case, the finished product has been held to be not a textile fabric. I note that Shri Lakshmi Kumaran urged that the Tariff Item 22B covers only those textile fabrics (other than cotton, man-made fibre, etc.) and not a product as the one we have in hand. It, therefore, appears that the classification of the product under Tariff Item 22B of the Central Excise Tariff as pleaded by the learned SDR during the course of the arguments may not be correct. However, in any event, my views about re-classification are expressed in para 26.
28. The Counsel for the respondent during the course of the arguments submitted that the demand for duty was time-barred in view of the judgment of the Supreme Court in the case of Gokak Patel. I note his arguments. I do not, however, give any finding on this subject in view of the decision we have taken that the classification of the product under Tariff Item 19 is not correct. Such finding would now be redundant. However, these observations need not be considered as my views as I am not examining these points.
29. For the aforesaid reasons the appeals are dismissed. The respondents may be given consequential reliefs.
30. I have had the advantage of going through the different judgments prepared by my learned Brothers. After reading and re-reading the judgments so prepared, I fully agree with my learned Brother Shri I.J.Rao, Member (Technical) that the judgments rendered by the High Courts of Andhra Pradesh and Bombay in the case of Insulations and Plastics Pvt. Ltd. v. Asstt. Collector of Central Excise, 1988 (35) ELT 45 (A.P.) and Sheet Thermoplastics Ltd. v. UOI, 1988 (36) ELT 106 (Bom.) respectively and which are based on the test laid down by the Hon'ble Supreme Court in the case of Collector of Central Excise v. Multiple Fabrics Pvt. Ltd., 1987 (29) ELT 481, apply on all fours to the instant case and no exception, as observed by my learned Brother Shri P.C.Jain, Member (Technical), could be taken.
31. In the result I agree with my learned Brother Shri I.J. Rao, Member (Technical) in toto and dismiss the appeals with consequential relief to the respondents, if any.