2004 (4) TMI 398 - AT - Central Excise

Benefit of exemption under Notification No. 26/94-C.E., dated 1-3-1994 as amended by Notification No. 90/94-C.E. available.

Summary

Issues:
Whether the product manufactured by M/s. Threads (India) Ltd. qualifies as sewing thread under the Central Excise Tariff Act.

Analysis:
The appeal in question revolves around the classification of the product manufactured by M/s. Threads (India) Ltd. as sewing thread under the Central Excise Tariff Act. The Appellants claimed exemption for their product under Notification No. 26/94-C.E., dated 1-3-94, as amended by Notification No. 90/94. The dispute arose when the Asstt. Commissioner denied the exemption, citing that the weight of the item exceeded 1000 gms. by a few grams, although other characteristics specified in Note 3 to Section XI of the Central Excise Tariff Act were met. The Commissioner (Appeals) upheld this decision, asserting that the product in question indeed constituted sewing thread and thus, the benefit of the Notification was denied.

The Appellants argued that the weight of the support exceeding 1000 gms. rendered the other conditions specified in Note 3 irrelevant, contending that all three conditions must be satisfied for a product to be classified as sewing thread under the relevant Headings. On the contrary, the Respondent supported the lower authorities' findings, emphasizing that the slight increase in weight was an attempt to exploit the exemption. Reference was made to a previous decision highlighting that once a party admits that the goods are specified and lack independent use, there is no need for the department to prove the same.

Upon careful consideration, the Tribunal analyzed the definition of sewing thread as per Note 3 to Section XI of the Central Excise Tariff Act. It was established that for a product to be classified as sewing thread, all three requirements specified in Note 3 must be met. The Tribunal noted that the product in question did not fulfill the condition of being put on a support weighing not exceeding 1000 gms., thereby failing to meet clause (a) of Note 3. The Tribunal also dismissed the notion that the weight increase did not alter the essential characteristics of the product. It was clarified that once the weight surpasses 1000 gms., the product cannot be categorized as sewing thread under the relevant Headings.

Moreover, the Tribunal refuted the Revenue's claim that the Appellants had admitted their product to be sewing thread, as the manufacturing process clearly indicated the weight of the support exceeded 1000 gms. Consequently, the Supreme Court decision cited by the Respondent was deemed inapplicable to the present case. Ultimately, the Tribunal set aside the impugned order, allowing the appeal and any consequential relief warranted.