2008 (9) TMI 633 - AT - Central Excise

Tapes - Hook and loop tapes of Nylon and Polyester yarn - Classification of goods - Basis of - Words and Phrases - Selvedges

Summary

Issues:
Classification of Hook and Loop Tapes under Central Excise Tariff - Whether under sub-heading 5806.10 as "Narrow Woven Fabric" or under sub-heading 9606.90 as "Snap Fasteners."

Detailed Analysis:
The dispute in the appeals centered around the classification of Hook and Loop Tapes of Nylon and Polyester yarn manufactured by a company. The Commissioner held that the tapes should be classified under sub-heading 9606.90 as "Snap fasteners" and not under sub-heading 5806.10 as "Narrow Woven Fabric." The duty demands were confirmed for specific periods, and penalties were imposed. The company appealed against this decision, while the Revenue filed a review appeal concerning the recovery of interest on duty. The arguments presented by both sides emphasized the manufacturing process, technical literature, and relevant case laws.

The company argued that the tapes should be classified as "Narrow Woven Fabric" under sub-heading 5806.10 based on the manufacturing process and technical aspects. They highlighted the definition of "Narrow Woven Fabric" and cited relevant government orders and technical literature to support their position. On the other hand, the Revenue contended that the tapes should be classified as "Snap Fasteners" under sub-heading 9606.90, referencing a Supreme Court judgment and trade parlance to justify their stance.

The Tribunal carefully considered the manufacturing process of the tapes and the definitions under the Central Excise Tariff. The key point of contention was whether the tapes qualified as "narrow woven fabrics" under sub-heading 5806.10 or as "snap or press fasteners" under sub-heading 9606.90. The Tribunal reviewed the relevant tariff entries and Chapter Note 6 to Chapter 58, which specified the requirements for classification as "narrow woven fabrics."

The Tribunal noted that the Commissioner's decision was based on statements from company representatives regarding the presence of selvedges on the tapes. However, it emphasized the need for independent verification of this fact through sample testing and expert opinion. Referring to a previous Tribunal decision upheld by the Supreme Court, the Tribunal stressed the importance of adhering to the specific criteria for classification outlined in the tariff.

Consequently, the Tribunal set aside the Commissioner's order and remanded the matter for fresh adjudication. It directed the verification of whether the tapes met the criteria for "narrow woven fabrics" and emphasized the importance of considering expert opinions in the reevaluation process. The decision also highlighted the potential liability for interest on duty if a different classification led to duty demands. Both appeals were disposed of in light of these directions.