2011 (3) TMI 245 - SC - Central Excise

Classification - Non speaking order - whether or not embroidery work is carried out by the respondents by using machines operated with power relates to basic facts and is an issue going to the root of the dispute - Appeal is allowed by way of remand to the Tribunal for de novo consideration of all the issues that arise for consideration afresh

Summary

Issues: Classification of embroidery work under Central Excise Tariff Act, 1985

Analysis:
The primary issue in this case revolves around the classification of embroidery work carried out by the assessee under the Central Excise Tariff Act, 1985. The contention raised by the appellant is that the embroidery work should be classified under Chapter 58 of the Act, specifically under sub-heading 5805.19. On the other hand, the respondent argues that the embroidery work falls under sub-heading 5805.90. The Tribunal had classified the work under the latter sub-heading. The critical point of contention is whether the embroidery work was done using vertical type automatic shuttle embroidery machines operated with power, as specified under Heading 5805.

The classification of the embroidery work is crucial as it determines the duty leviable on the products. The interpretation of Heading 5805, which deals with embroidery in various forms, is central to resolving the classification dispute. Note Nos. 5 and 8 of Chapter 58 of the Act provide essential definitions and guidelines for understanding the scope of embroidery work and related processes like dyeing and heat-setting. The appellant asserts that the respondents engaged in both embroidery work and manufacturing activities involving dyeing and heat-setting. Conversely, the respondent denies carrying out embroidery work with the specified machines and argues for classification under sub-heading 5805.90.

A critical aspect highlighted in the judgment is the lack of consideration by the Tribunal regarding whether the respondents utilized the specified embroidery machines operated with power. This factual aspect is deemed essential in determining the applicability of Heading 5805 and the subsequent classification under the relevant sub-heading. The Supreme Court emphasized the need for a thorough examination of all pertinent issues, including the use of specific machinery, manufacturing activities, and the correct classification under the Central Excise Tariff Act, 1985.

In light of the incomplete consideration of crucial factual and legal aspects by the Tribunal, the Supreme Court set aside the previous judgment and remitted the case for a fresh consideration of all issues. It is noteworthy that the Court refrained from expressing any final opinion on the merits of the arguments presented, leaving the Tribunal to conduct a comprehensive evaluation of the classification dispute. The decision underscores the significance of factual accuracy and legal interpretation in determining the appropriate classification of goods under the Central Excise Tariff Act, 1985.