Bhiwani Textile Mills Vs. Collector of C. Ex. - Court Judgment

Excerpt:
1. in this case the issue for decision is the correct classification of blended yarn containing polyester, viscose and cotton in the proportion of 48%, 47% and 5% respectively. appellants have paid duty on this product under tariff item no. 18-iii(ii) @ rs. 18/- per kg. the assistant collector of central excise held that it was assessable under central excise tariff item 18-e @ rs. 24/- per kg.2. when the party went up in appeal, the appellate collector upheld the classification under tariff item 18-e on the ground that tariff item 18-iii pertains to yarn in which man-made fibre of cellulosic origin predominates in weight. in this case the percentage of man-made cellulosic fibre being only 47%, it was held that the appellants plea that the goods are correctly classifiable under item 18-iii of central excise tariff had to be rejected and the goods had to be considered non-cellulosic yarn attracting classification under central excise tariff item 18-e. however, the appellate collector partly allowed the appeal inasmuch as he held that the demand for duty will be valid only within the normal time limit and not the enhanced time limit.3. shri s.p. kampani, consultant, appears on behalf of the appellants and submits that what has been over-looked by the lower authorities is that cotton is also of cellulosic origin. the consultant submits that there has been an error at the lower level in taking a view on what is the meaning of the expression "predominates in weight" used in tariff item 18-hi, which is meant for yarn in which man made fibre of cellulosic origin predominates. it is submitted that where yarn is composed of a number of different fibres, it would not be logical to consider the yarn as made from a particular fibre merely because it is a largest single constituent and that the expression "predominates" would imply that the fibre should comprise over 50% of the weight of the yarn. in this connection shri kampani has referred to the ratio of the decision of this bench in the case of gaekwar mills ltd., bombay v.collector of central excise, baroda 4. shri kampani has also cited the decision of this bench in the case of rajas-than spinning & weaving mills, kharigram v. collector of central excise, jaipur [1984 (4) et 139] in which it was held that yarn having composition as polyester/viscose/acrylic in the ratio of 24:26:50 would also be classifiable under item 68. shri kampani states that, although this has not been contended by the appellants before the lower authorities, they would now like to submit that the correct classification for the product, in view of the foregoing arguments, is under item 68 of the central excise tariff.5. shri p.k. ajwani, sdr appearing for the department reiterates the view expressed by lower authorities. he submits that the request for classification under item 68 is not tenable as no submission in this regard was made before the lower authorities.6. we have carefully considered the facts of the case, the orders of the lower authorities and the submissions made before us. we observe that appellants have for the first time taken the plea before us that the impugned goods are correctly classifiable under item 68 of the central excise tariff. this view has, therefore, remained un-examined at the lower levels. the plea, however, is related to the main issue of correct classification and it's a point of law and there can be no bar to the making of this plea even at this stage.7. we have carefully considered the wordings of central excise tariff item 18-iii and 18-e. item 18-hi relates to cellulosic spun yarn in which man made fibre of cellulosic origin predominates in weight. in the case of yarn in question only viscose fibre, present in the proportion of 47%, can be considered as man made fibre of cellulosic origin. considering the presence of polyester spun fibre to the extent of 48% it cannot be said that viscose fibre predominates. the plea made by the appellants the cotton is also of cellulosic origin does not help because central excise tariff item no. 18-hi is clearly meant for yarn in which man made fibre of cellulosic origin predominates and cotton cannot fall in the category of man made fibre of cellulosic origin. in view of this the impugned goods are not classifiable under item no.18-111 of the central excise tariff.8. item 18-e of the central excise tariff is for non-cellulosic spun yarn in which man made fibres of non-cellulosic origin, other than acrylic fibre, predominate in weight. once again adverting to the proportion in which different fibres are contained in the impugned goods, it is seen that man made fibre of non-cellulosic origin contained in the yarn in question is only 48%. following the ratio of the decision of this bench in the case of gaekwar mills ltd. bombay (supra) with which we wholly agree, we don't think that it can be said that in the impugned goods, man made fibre of non-cellulosic origin predominates. therefore, the yarn in question is also not classifiable under item 18-e of the central excise tariff.9. in the appellate orders, it has already been decided that the demand for duty is to be limited to the normal period. this view is upheld.10. in the light of the foregoing discussions the correct classification of the impugned yarn is under item 68 of the central excise tariff. ordered accordingly. however, recovery will be restricted to the demand as modified per appellate collector's order.

Judgment:
1. In this case the issue for decision is the correct classification of blended yarn containing polyester, viscose and cotton in the proportion of 48%, 47% and 5% respectively. Appellants have paid duty on this product under Tariff Item No. 18-III(ii) @ Rs. 18/- per Kg. The Assistant Collector of Central Excise held that it was assessable under Central Excise Tariff Item 18-E @ Rs. 24/- per kg.

2. When the party went up in appeal, the Appellate Collector upheld the classification under Tariff Item 18-E on the ground that Tariff Item 18-III pertains to yarn in which man-made fibre of cellulosic origin predominates in weight. In this case the percentage of man-made cellulosic fibre being only 47%, it was held that the appellants plea that the goods are correctly classifiable under Item 18-III of Central Excise Tariff had to be rejected and the goods had to be considered non-cellulosic yarn attracting classification under Central Excise Tariff Item 18-E. However, the Appellate Collector partly allowed the appeal inasmuch as he held that the demand for duty will be valid only within the normal time limit and not the enhanced time limit.

3. Shri S.P. Kampani, Consultant, appears on behalf of the appellants and submits that what has been over-looked by the lower authorities is that cotton is also of cellulosic origin. The Consultant submits that there has been an error at the lower level in taking a view on what is the meaning of the expression "predominates in weight" used in Tariff Item 18-HI, which is meant for yarn in which man made fibre of cellulosic origin predominates. It is submitted that where yarn is composed of a number of different fibres, it would not be logical to consider the yarn as made from a particular fibre merely because it is a largest single constituent and that the expression "predominates" would imply that the fibre should comprise over 50% of the weight of the yarn. In this connection Shri Kampani has referred to the ratio of the decision of this Bench in the case of GAEKWAR Mills Ltd., Bombay v.Collector of Central Excise, BARODA 4. Shri Kampani has also cited the decision of this Bench in the case of Rajas-than Spinning & Weaving Mills, KHARIGRAM v. Collector of Central Excise, JAIPUR [1984 (4) ET 139] in which it was held that yarn having composition as polyester/viscose/acrylic in the ratio of 24:26:50 would also be classifiable under Item 68. Shri Kampani states that, although this has not been contended by the appellants before the lower authorities, they would now like to submit that the correct classification for the product, in view of the foregoing arguments, is under Item 68 of the Central Excise Tariff.

5. Shri P.K. Ajwani, SDR appearing for the department reiterates the view expressed by lower authorities. He submits that the request for classification under Item 68 is not tenable as no submission in this regard was made before the lower authorities.

6. We have carefully considered the facts of the case, the Orders of the lower authorities and the submissions made before us. We observe that appellants have for the first time taken the plea before us that the impugned goods are correctly classifiable under Item 68 of the Central Excise Tariff. This view has, therefore, remained un-examined at the lower levels. The plea, however, is related to the main issue of correct classification and it's a point of law and there can be no bar to the making of this plea even at this stage.

7. We have carefully considered the wordings of Central Excise Tariff Item 18-III and 18-E. Item 18-HI relates to cellulosic spun yarn in which man made fibre of cellulosic origin predominates in weight. In the case of yarn in question only viscose fibre, present in the proportion of 47%, can be considered as man made fibre of cellulosic origin. Considering the presence of polyester spun fibre to the extent of 48% it cannot be said that viscose fibre predominates. The plea made by the appellants the cotton is also of cellulosic origin does not help because Central Excise Tariff Item No. 18-HI is clearly meant for yarn in which man made fibre of cellulosic origin predominates and cotton cannot fall in the category of man made fibre of cellulosic origin. In view of this the impugned goods are not classifiable under Item No.18-111 of the Central Excise Tariff.

8. Item 18-E of the Central Excise Tariff is for non-cellulosic spun yarn in which man made fibres of non-cellulosic origin, other than acrylic fibre, predominate in weight. Once again adverting to the proportion in which different fibres are contained in the impugned goods, it is seen that man made fibre of non-cellulosic origin contained in the yarn in question is only 48%. Following the ratio of the decision of this Bench in the case of Gaekwar Mills Ltd. Bombay (supra) with which we wholly agree, we don't think that it can be said that in the impugned goods, man made fibre of non-cellulosic origin predominates. Therefore, the yarn in question is also not classifiable under Item 18-E of the Central Excise Tariff.

9. In the appellate orders, it has already been decided that the demand for duty is to be limited to the normal period. This view is upheld.10. In the light of the foregoing discussions the correct classification of the impugned yarn is under Item 68 of the Central Excise Tariff. Ordered accordingly. However, recovery will be restricted to the demand as modified per Appellate Collector's order.