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2020 (1) TMI 756 - AT - Central ExciseBenefit of N/N. 254/87-CX dated 25.11.1987 - demand duty in respect of the man made fabrics cleared by them - admissible limit of percentage of polyester in manmade fabric - HELD THAT - Commissioner (Appeals) has in the impugned order denied the benefit of the Board s Letter 261/19/12/76- CX.8 dated 25.2.1977 - We are not in position to agree with the views expressed by the Commissioner (Appeal) for the reason that it is based on erroneous reading of the said letter. The finding recorded by Commissioner (Appeal) to the effect that the said Board letter applies only to rayon/ artificial silk and not polyester has been rejected by the tribunal in case of MORARJEE GOCULDAS SPG. WVG. CO. LTD. VERSUS COMMR. OF C. EX., MUMBAI 1997 (12) TMI 365 - CEGAT, MUMBAI where it was held that It is evident therefore that in order to arrive at the classification, fabric made from yarn or a mixture of synthetic or artificial yarn with cotton or wool, the tolerance factor has to be applied. Appeal allowed - decided in favor of appellant.
Issues:
1. Appeal against order allowing revenue's appeal and setting aside dropping of demand. 2. Dispute regarding duty on man-made fabrics under Notification No 254/87-CX due to polyester percentage. 3. Benefit claim under Board's Letter 261/19/12/76-CX.8 for polyester percentage below 70%. 4. Commissioner (Appeals) denying benefit of Board Letter for fabrics with polyester above 70%. 5. Tribunal's disagreement with Commissioner (Appeals) based on erroneous reading of Board Letter. 6. Application of tolerance factor for determining fabric composition and duty rate. Analysis: 1. The appeal challenges the order setting aside the dropping of demand for duty on man-made fabrics. The dispute arose from Show Cause Cum Demand Notices issued based on the percentage of polyester in the fabrics cleared by the appellant under Notification No 254/87-CX. 2. The Assistant Commissioner dropped the demand based on sample test reports but the Commissioner (Appeals) set aside this decision, leading to the current appeal. The key issue revolved around determining the correct slab of duty rate based on the percentage of polyester in the fabrics. 3. The appellant claimed benefit under Board's Letter 261/19/12/76-CX.8 to bring the polyester percentage below 70% for certain fabric qualities. The Assistant Commissioner found this claim admissible for specific qualities, allowing the benefit and dropping the demand. 4. However, the Commissioner (Appeals) denied the benefit of the Board Letter, stating that the allowance of 2.5% was restricted to rayon or artificial silk, not polyester. Consequently, fabrics with polyester above 70% were deemed ineligible for concessional duty rates. 5. The Tribunal disagreed with the Commissioner (Appeals), citing an erroneous reading of the Board Letter. Referring to past judgments, including New Shorrock Mills and Morarjee Goculdas Spg. & Wvg. Co. Ltd, the Tribunal emphasized applying tolerance factors in determining fabric composition and duty rates. 6. The Tribunal's analysis highlighted the importance of considering tolerance factors and trade practices in determining fabric composition for duty purposes. By setting aside the Commissioner (Appeals)' decision, the Tribunal allowed the appeal, emphasizing the application of tolerance in such cases for a fair assessment of duty rates.
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