1979 (10) TMI 82 - CGOVT - Central Excise

Issues Involved:
1. Classification of nylon twine under Central Excise Tariff Item 68.
2. Denial of natural justice due to lack of personal hearing.
3. Historical classification practices and their relevance post-1-3-1975.
4. Application of ISI specifications in classification.
5. Alleged discrimination in duty assessment across different Collectorates.

Detailed Analysis:

1. Classification of Nylon Twine under Central Excise Tariff Item 68:
The petitioners argued that nylon twine should be classified under Item 18 of the Central Excise Tariff as it is merely a twisted form of nylon yarn and does not constitute a new product. They contended that the conversion of yarn into twine does not amount to "manufacture" under Section 2(f) of the Central Excises and Salt Act. However, the Government disagreed, stating that the process of converting yarn into twine involves twisting two or more yarns to produce a balanced structure with distinct characteristics and uses, such as tying, packing, and sewing, which differ from those of yarn. The Government concluded that the conversion process constitutes manufacturing, making nylon twine a new product distinct from yarn and thus falling under Item 68 of the Central Excise Tariff.

2. Denial of Natural Justice:
The petitioners claimed that they were denied natural justice as they were not given a personal hearing by the Assistant Collector before the classification decision. However, the Government noted that the Appellate Collector had indeed heard the petitioner's representatives and discussed the matter with them. The petitioners did not seek a remand for de novo adjudication, acknowledging the prolonged duration of the case.

3. Historical Classification Practices:
The petitioners highlighted that prior to 1-3-1975, nylon twine was cleared under Item 18 of the Central Excise Tariff. They argued that this practice should continue even after the insertion of Item 68. The Government countered that the authorities had not considered the denierage of twine for duty purposes and had shifted the point of levy from yarn to twine for convenience. The Government maintained that the absence of an explanation extending Item 18 to include nylon twine indicated that nylon twine should be classified under Item 68.

4. Application of ISI Specifications:
The petitioners relied on ISI Specification IS: 232: 1967, which defines twine as "A plied yarn made by twisting together two or more strands of yarn." The Government, however, pointed out that this specification pertains to natural fibers, whereas nylon is a man-made fiber. The relevant specification for man-made fibers, IS: 1324-1966, does not include nylon twine in its definition of yarn. The Government emphasized that ISI specifications are not decisive for classification under the Central Excise Tariff, which should be based on commercial parlance.

5. Alleged Discrimination in Duty Assessment:
The petitioners alleged that nylon twine was being cleared as yarn in other Collectorates like Madurai and Cochin, implying discriminatory treatment. The Government refuted this claim, stating that nylon twine was being charged to duty under Item 68 in those Collectorates as well.

Conclusion:
The Government upheld the Assistant Collector's decision, concluding that nylon twine is a distinct product from nylon yarn and should be classified under Item 68 of the Central Excise Tariff. The Government found no merit in the petitioners' arguments regarding the denial of natural justice, historical classification practices, reliance on ISI specifications, and alleged discriminatory treatment. The decision emphasized the importance of commercial parlance in classification and dismissed the petitioners' claims.

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