2010 (12) TMI 195 - AT - Central Excise

Classification - Two show-cause notices one dt. 1.6.2001 covering the period May 2000 to March 2001 and the other dt. 3.5.2002 covering the period April 2001 to August 2001 were issued - according to the Revenue, they fall under CET sub-heading 5205.11/5606.00 - Lycra Core Spun Yarn/ Spandex is composed of core of lycra/spandex surrounded by staple fibres - In terms of Section note 2(A) to section XI of CETA 1985 goods of Chapters 52 to 55 consisting of a mixture of two or more textile materials are to be classified as if consisting wholly of that one textile material which predominates by weight over any other single textile material - In the present case the covered spandex yarn is a combination of two textile materials viz., cotton fibre and spandex yarn admittedly cotton fibre predominates by weight As per HSN (Page 855 Vol.2) Gimped yarn is composed of core, usually of one or more textile yarn, around which other yarn or yarns, are wound spirally - As the cotton percentage predominates over the percentage of lycra the disputed goods viz lycra spandex yarn is correctly classifiable under 5205.11 as per HSN, which is to be given precedence over the SITRA reports which is not based on HSN Appeal is disposed of by setting aside classification under CET sub-heading 5606.00 and holding that the correct classification is CET sub-heading 5205.11 and Appeal Nos.1064 & 1085/04 are dismissed

Summary

Issues Involved:
1. Classification of cotton lycra core spun yarn.
2. Applicability of CET sub-heading 5205.90 vs. CET sub-heading 5205.11/5606.00.
3. Consideration of expert opinions and previous Tribunal decisions.
4. Interpretation of tariff headings and amendments.

Detailed Analysis:

1. Classification of Cotton Lycra Core Spun Yarn:
The primary issue revolves around the classification of cotton lycra core spun yarn. The assessees claimed classification under CET sub-heading 5205.90, while the Revenue argued for classification under CET sub-heading 5205.11/5606.00. The Tribunal needed to determine whether the goods fit under single yarn or gimped yarn categories.

2. Applicability of CET Sub-heading 5205.90 vs. CET Sub-heading 5205.11/5606.00:
The Tribunal examined the classification claims under different sub-headings. The initial classification under CET sub-heading 5205.11 was challenged, leading to show-cause notices and subsequent adjudication. The Revenue's proposal for classification under Chapter Heading 56.06 was rejected by the Asst. Commissioner, who classified the goods under CET sub-heading 5205.11. The Tribunal found that the core yarn surrounded by cotton fibres does not fit the definition of gimped yarn under Chapter Heading 56.06, as both the core yarn and covering material should be yarns. The post-amendment period saw the deletion of "other special yarn" from Heading 56.06, reinforcing the Tribunal's decision.

3. Consideration of Expert Opinions and Previous Tribunal Decisions:
The Tribunal considered expert opinions, including the SITRA (South Indian Textile Research Association) reports, which classified the yarn as core spun yarn. However, the Tribunal found that these opinions did not align with the HSN (Harmonized System of Nomenclature) classification. The Tribunal also referred to previous decisions, such as CCE Ahmedabad Vs ARCEE Nettings and Venkys Fast Food Vs CCE Pune, to interpret the classification criteria based on single and double dash descriptions in tariff headings.

4. Interpretation of Tariff Headings and Amendments:
The Tribunal analyzed the amendments to the tariff headings and their alignment with the Customs Tariff Act. The amendments in 1995 aligned the Central Excise Tariff with the Customs Tariff, impacting the classification criteria. The Tribunal emphasized that the classification should be based on the predominant textile material by weight, as per Section Note 2(A) to Section XI of CETA 1985. Since the cotton fibre predominated by weight over lycra, the classification under Heading 52.05 was appropriate.

Conclusion:
The Tribunal concluded that the cotton lycra core spun yarn should be classified under CET sub-heading 5205.11, rejecting the claims for classification under CET sub-heading 5205.90 and 5606.00. The Tribunal's decision was based on the interpretation of tariff headings, expert opinions, and alignment with HSN classification. The appeals were disposed of accordingly, with one appeal setting aside the classification under CET sub-heading 5606.00 and holding the correct classification under CET sub-heading 5205.11, while the other appeals were dismissed.