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2018 (6) TMI 371 - AT - Central ExciseClassification of goods - bolting cloth - whether classifiable under CETH 5406.10 as claimed by BBCPL or would be classifiable under CETH 59.11 of Central Excise Tariff Act, 1985 - Clubbing of Clearances - CENVAT credit - Rule 4 of CENVAT Credit Rules - Held that - The Hon'ble Apex Court in the case of Simplex Mills Co. Ltd. 2005 (3) TMI 117 - SUPREME COURT OF INDIA has clearly held that running length of unprocessed goods would not be covered under Chapter 59 - There is no dispute that the goods are cleared inn running length and not in cut pieces. Since the issue of classification is clearly covered in the favour of respondents, the goods would not be classifiable under heading 59.11. The other issue relating to clubbing and availability of CENVAT Credit in view of classification under heading 59.11 do not affect the outcome of demand. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Classification of fabric as "bolting cloth" under CETH 59.11. 2. Clubbing of clearances of multiple firms for SSI exemption. 3. Admissibility of CENVAT Credit under the proviso to Rule 4 of CENVAT Credit Rules. Detailed Analysis: 1. Classification of Fabric as "Bolting Cloth" under CETH 59.11: The primary issue was whether the fabric manufactured by the appellant should be classified under heading 59.11 as bolting cloth. The Revenue argued that the fabric, referred to as "bolting cloth," should be classified under CETH 59.11 based on the test results from the Custom House Laboratory and the Textile Committee, which indicated that the fabric could be used as bolting cloth. The Revenue relied on the CBEC Circular No. 48/2/97 dated 17.4.1997, which stated that fabrics in a finished state, ready for use as bolting cloth, should be classified under Chapter 59. However, the Tribunal noted that the goods were cleared in running length and not in cut pieces, which is a requirement under Chapter Note 7 for classification under heading 59.11. The Tribunal referenced the decision in Simplex Mills Co. Ltd. - 2005 (181) ELT 345 (SC), where the Hon'ble Apex Court held that running lengths of unprocessed textiles would not fall under Chapter 59. Consequently, the Tribunal upheld the classification of the goods under heading 54.06 and dismissed the Revenue's appeal on this issue. 2. Clubbing of Clearances of Multiple Firms for SSI Exemption: The Revenue contended that the clearances of all firms controlled by the three directors should be clubbed to determine eligibility for SSI exemption. The impugned order, however, held that five firms existed before the formation of BBCPL and could not be considered dummies of BBCPL. The Tribunal relied on the decision in Modi Alkalies & Chemicals Ltd - 2004 (171) ELT 155 (SC), which stated that unless pervasive financial and management control is shown, clearances cannot be clubbed. The Tribunal found no evidence of common fund flow, pooling of profits, or common flow back of profits to the main entity. Thus, the Tribunal upheld the impugned order, rejecting the Revenue's argument for clubbing clearances. 3. Admissibility of CENVAT Credit: The Revenue argued that since the goods were classified under CETH 59.11, BBCPL could not have taken credit under the proviso to Rule 4 of CENVAT Credit Rules for the period April 2003 to July 2004. However, since the Tribunal upheld the classification of the goods under heading 54.06, the issue of CENVAT Credit admissibility under heading 59.11 became moot. The Tribunal found no grounds to alter the impugned order regarding CENVAT Credit. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the classification of the goods under heading 54.06, rejecting the clubbing of clearances for SSI exemption, and rendering the issue of CENVAT Credit admissibility irrelevant due to the classification decision. The appeal was dismissed in its entirety.
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