2006 (4) TMI 325 - AT - Central Excise

Summary

Issues:
1. Classification of goods under Central Excise Tariff Act, 1985.
2. Requirement of heat setting for classification as Bolting Cloth.
3. Time bar for the demand of duty.
4. Interpretation of Board circular regarding Bolting Cloth classification.

Classification of Goods:
The case involved the classification of goods manufactured and cleared by M/s. Drishti Inds. Ltd. under Chapter Heading 59.11 instead of Chapter Heading 54.06 of the Central Excise Tariff Act, 1985. The dispute arose from the claim of exemption under different Notifications by the assessee. The Tribunal noted the earlier decision where it was held that the goods in question were Grey Fabric Cloth and not Bolting Cloth due to the absence of heat setting, necessary to prevent deformation by use. The importance of cross-examining experts who tested the fabrics to determine their classification was emphasized.

Requirement of Heat Setting:
The Commissioner, in the impugned order, disregarded the necessity of heat setting for goods to be classified as Bolting Cloth under Chapter 59. The applicants argued that the presence of heat setting was crucial for the classification. The Tribunal, after reviewing the remand order and the statements of witnesses confirming the absence of heat setting on the fabric, found a strong prima facie case for waiver of pre-deposit. Consequently, the Tribunal waived the pre-deposit of duty and penalties pending the appeals.

Time Bar and Interpretation of Board Circular:
The applicants contended that the demand was time-barred and raised concerns regarding the interpretation of the Board circular dated 16-2-1998. The circular highlighted that the meshes of Bolting Cloth should not deform by use, without specifying heat setting as a prerequisite. The learned SDR argued that based on this circular, the demand of duty was sustainable. However, the Tribunal focused on the absence of heat setting on the fabric as a determining factor for classification, leading to the decision in favor of the applicants.

In conclusion, the Tribunal granted the waiver of pre-deposit of duty and penalties, considering the absence of heat setting on the fabric as a crucial factor in classifying the goods as Bolting Cloth under Chapter Heading 59.11 of the Central Excise Tariff Act, 1985. The interpretation of the Board circular and the time bar for the demand were also discussed, with the Tribunal emphasizing the importance of heat setting in determining the classification of the goods.