2016 (1) TMI 327 - SC - Central Excise

Classification of Yarn - textured yarn or not - Proceedings initiated by way of letter set aside by the tribunal - later revenue issued the SCN - classifiable under Heading 5402.31 and 5401.32 or under Heading 5402.31 and 5401.32. - Held that - In view of the fact that the show cause notice is pending adjudication, we dispose of this appeal with a direction to the Adjudicating Officer to decide the said show cause notice. - it would be open to both the parties to rely upon the respective material which, according to them support their respective case and on that basis the Adjudicating Authority shall decide the matter on merits.

Summary

Issues: Classification of goods under different headings, pending show cause notice, consideration of material by Tribunal

Classification of goods under different headings:
The Supreme Court addressed the issue of classifying yarn manufactured by the assessee under specific headings. The Tribunal classified the goods under Heading 5402.61 and 5401.62, contrary to the Revenue's contention that they should be under Heading 5402.31 and 5401.32. The Department had issued a show cause notice to classify the goods as textured yarn, which is still pending adjudication. The Court directed the Adjudicating Officer to decide on the show cause notice, allowing both parties to rely on material supporting their cases for the Authority to make a decision on merits.

Pending show cause notice:
The Court noted the existence of a pending show cause notice issued by the Department regarding the classification of goods as textured yarn. In light of this pending adjudication, the Court disposed of the appeal with a direction to the Adjudicating Officer to decide on the show cause notice. Both parties were permitted to present material supporting their respective cases for the Authority to make a decision based on merit.

Consideration of material by Tribunal:
During the proceedings, the Revenue's counsel referred to certain material not considered by the Tribunal, while the assessee's counsel highlighted test reports from different laboratories indicating that the samples of yarn were not textured yarn. The Court emphasized that both parties could rely on their respective material to support their cases, and the Adjudicating Authority would decide the matter on its merits. Ultimately, the appeal was disposed of based on these considerations, allowing for a comprehensive review of the material by the Adjudicating Officer for a final decision.