1996 (10) TMI 80 - SC - Central Excise

Whether a particular variety of fabric known as Sort No. 89225 manufactured by assessee will fall under Item 22 of the Central Excise Tariff Schedule,or under Item No. 19 (sic) of the Tariff Schedule? Held that - The appellant cannot derive any assistance from the decision of Collector of Central Excise v. Rajasthan Spg. & Wvg. Mills Ltd. 1992 (1) TMI 127 - SUPREME COURT OF INDIA . It merely lays down that in the case of composite yarn even though acrylic fibre constituted 50 per cent in weight, it will be deemed to be the predominant fibre by virtue of the specific statutory provisions to that effect contained in Explanation III to sub-item (iii) under Tariff Item No. 18. The case before us is in respect of fabric and not yarn. Either percentage-wise or weight-wise, cotton has not been found to be the predominant fibre as a matter of fact. There is no law that in such a situation, cotton must be deemed to be the predominant fibre and the fabric must be treated as cotton fabric. Against assessee.

Summary

Issues:
Classification of fabric under Central Excise Tariff Schedule - Whether fabric falls under Item 22 or Item 19 of the Tariff Schedule.

Analysis:

1. The appeal before the Supreme Court was regarding the classification of a specific fabric known as Sort No. 89225 manufactured by a company. The dispute was whether the fabric should be classified under Item 22 (Man-Made Fabrics) or Item 19 (Cotton Fabrics) of the Central Excise Tariff Schedule.

2. The relevant Tariff Items were examined to determine the classification. Item 19 pertains to Cotton Fabrics, while Item 22 relates to Man-Made Fabrics. The Collector of Central Excise argued that the fabric should fall under Item 22, while the Tribunal classified it under Item 19.

3. The Collector needed to establish that the fabric either had cotton predominating in weight or contained more than 40% cotton and 50% non-cellulosic fibres. However, the fabric in question only had 35% cotton, and the Collector did not claim that the weight of cotton exceeded the combined weight of polyester and viscose fibres.

4. The Tribunal rejected the argument that if cotton was the largest constituent, the fabric should be treated as cotton fabric. The Tribunal held that for Tariff Items 19 and 22, absolute predominance exceeding 50% in weight was required. The fabric under consideration did not meet this criterion.

5. It was argued that the fabric was not known in the market as cotton fabric, and instead, it was recognized as man-made fabric. The absence of a special definition in the Excise Act meant that the fabric should be understood in the market context.

6. Reference was made to a previous case involving the classification of mixed yarn, where a legal fiction deemed a specific fibre to be predominant due to statutory provisions. However, this case was distinguished as it pertained to yarn and did not apply to the fabric in question.

7. Ultimately, the Supreme Court dismissed the appeal, stating that the fabric did not qualify as cotton fabric based on the Tariff Entries and market understanding. The decision of the Tribunal was upheld, and the appeal was rejected with no order as to costs.