2016 (8) TMI 756 - AT - Central Excise

Classification - activated carbon fabrics - whether to be classified under heading 5911 as Textile products and articles , for technical use as per appellant or under 3802 as activated carbon as per Revenue - Held that - inasmuch as the goods continued to remain a fabric, it merits classification under section XI of Central Excise Tariff Act dealing with textile and textile articles. Hence, appropriate classification will be under Chapter 59 dealing with impregnated, coated, covered or laminated textile fabric; textile articles of a kind suitable for industrial use. From the reported use of the product, it is found that it is covered by Note 7 to Chapter 59 which attracts textile fabrics of a kind use for technical purposes falling under 5911. - Decided in favour of appellant

Summary

Issues:
Classification of product - Activated carbon fabrics under Chapter 59 or Chapter 38.

Analysis:
The dispute in this case revolves around the classification of a product called "activated carbon fabrics" manufactured by the appellant. The appellants classified the product under heading 5911 as "Textile products and articles, for technical use," while the revenue sought to classify it under 3802 as "activated carbon." The authorities confirmed the classification under 3802, leading to a demand for differential duty. The Commissioner (Appeals) upheld the classification under 3802 but set aside the demand for a specific period as time-barred.

To determine the appropriate classification, the manufacturing process of activated carbon fabric was crucial. The fabric undergoes treatment with acid solution/salts, drying, and carbonization/activation in a furnace, resulting in the end product known as Activated Carbon Cloth (ACC). The appellants argued that the product should be classified as a textile product under 5911, citing Chapter Note 7 which includes textile fabrics used for technical purposes.

On the other hand, the Revenue contended that the fabric, after treatment at high temperatures, transforms into activated carbonized fabric. They emphasized that the essential character of the product is determined by the activated carbon. The Revenue supported the classification under 3802 based on the Interpretative Rule 2(b.

The appellant's counsel referred to definitions of activated carbon from reputable sources to argue that the goods manufactured by them do not fit the classification of activated carbon under 3802. They presented samples to demonstrate that even after coating with carbon, the item retains its fabric nature.

Upon examining the samples and considering the technical literature, the Tribunal concluded that the activated carbon fabric, despite the treatment processes, retains its fabric characteristics. The product is primarily used for its absorbent properties in various applications. Therefore, the Tribunal classified the product under Chapter 59 as a textile article for industrial use, falling under 5911, rather than as a chemical product under Chapter 38. Consequently, the orders of the lower authorities were set aside, and the appeal was allowed.