1983 (10) TMI 235 - AT - Central Excise

Summary

Issues Involved:
1. Classification of spider cloth under Central Excise Tariff.
2. Marketability and excisability of spider cloth.
3. Interpretation of "impregnated fabric" under Item 19-III CET.
4. Validity of reclassification by the Collector of Central Excise.

Issue-wise Detailed Analysis:

1. Classification of Spider Cloth under Central Excise Tariff:
The primary issue was whether spider cloth should be classified under sub-item III of Item 19 of the Central Excise Tariff Schedule, which pertains to "Cotton fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials." The Assistant Collector initially ruled that spider cloth was not excisable as it was not marketable and did not fall under either Item 19 or Item 68. However, the Collector of Central Excise later held that spider cloth was excisable under Item 19-III, leading to the appeal.

2. Marketability and Excisability of Spider Cloth:
The Assistant Collector's decision was based on the argument that spider cloth, being an intermediate product, was not marketable. The Collector of Central Excise countered this by stating that excise duty is levied on manufacture, and the actual marketability of the product is not relevant. The Tribunal noted that the product could lie for 3 to 5 days before further processing, indicating no immediate deterioration, thus challenging the argument of short shelf life and non-marketability.

3. Interpretation of "Impregnated Fabric" under Item 19-III CET:
The Tribunal examined whether spider cloth conformed to the definition of "impregnated fabric" as per Fairchild's Dictionary of Textiles, which states that impregnated fabric should have interstices between yarns completely filled with an impregnating compound. The Customs laboratory report indicated that the interstices in spider cloth were open and water passed freely, thus not meeting the definition of "impregnated fabric." The Tribunal also considered the CBEC circular on interlining cloth, which supported the argument that porous fabrics are not classified as impregnated.

4. Validity of Reclassification by the Collector of Central Excise:
The appellants argued that the classification of spider cloth had been settled since 1970 and there were no new reasons to reopen the classification in 1980. The Tribunal noted that the Excise officers could revise classifications if new relevant facts emerged. However, the Tribunal found that the Collector's reclassification was based on an incorrect interpretation of "impregnated fabric" and thus was not justified.

Conclusion:
The Tribunal held that spider cloth did not qualify as "impregnated fabric" under Item 19-III CET due to the open interstices and permeability to water. The argument that it could be classified as "coated fabric" was dismissed as it was not raised before lower authorities. The appeal was allowed, and the Tribunal directed that consequential relief be given to the appellants.