2012 (1) TMI 128 - AT - Central Excise

Classification of goods - Classification under under the Heading 5506 or 5606 - Revenue sought classification thereof under SH 5606 - Held that - Nothing was brought to our notice by the appellant to show that the goods manufactured by it using polyester fibre and Viscos fibre was without special mechanical stimulation by a special electronic device which created an effect of thick and thin features in the yarns while spinning to impart slub effect. That established that the slub yarns manufactured were not normal yarns and Revenue s classification remain undisturbed - there is no scope to interfere to the first appellate order - Decided against assessee.

Summary

Issues: Classification of goods under Heading 5506 or 5606

In this judgment by the Appellate Tribunal CESTAT CHENNAI, the main issue was the classification of goods, specifically slub yarn of polyester viscose blend and spliced yarn, under Heading 5506 or 5606. The appellants argued that the goods should be classified under Heading 5506 as they were known as slub yarn by nature and process of manufacture. On the other hand, the Revenue contended that the goods should be classified under Heading 5606 due to the special procedure used in their manufacture.

Analysis:

The appellants claimed that during the relevant period, the goods were recognized as slub yarn and should be classified under Heading 5506. They argued that chenille yarn and gimped yarn, covered under Heading 5606, required special procedures for manufacture, unlike slub yarn. The use of a small device during spinning to create the slub effect did not make the yarn special enough to merit classification under Heading 5606.

In response, the Revenue pointed out that the appellants manufactured blended yarn with viscose and polyester fibers, giving the yarn a slub effect using an electronic device. They emphasized that the final product's classification was crucial for input credit eligibility, with Heading 5506 products being eligible while Heading 5606 products were not. The Revenue asserted that all special yarns, including slub yarn, falling outside the normal yarn category of Heading 5506, were covered under Heading 5606 due to the special treatment required during manufacture.

After hearing both sides and examining the records, the Tribunal found that the slub yarns manufactured by the appellants, with the special mechanical stimulation by an electronic device creating thick and thin features in the yarns, were not normal yarns. Therefore, the Revenue's classification under Heading 5606 was upheld. The Tribunal concluded that since no evidence was presented to dispute the special manufacturing process, the first appellate order's reasoning was sound, leading to the dismissal of the appeal.

In conclusion, the Tribunal determined that the goods in question, due to the special manufacturing process involving the electronic device to create the slub effect, were rightly classified under Heading 5606. The decision to dismiss the appeal was based on the lack of evidence to challenge the classification and the acknowledgment of the special nature of the manufactured yarns.