1997 (11) TMI 104 - HC - Central Excise

Summary

Issues:
Classification of Tyre Cord Warp Sheet as Fabric or Yarn; Applicability of Tariff Items 18, 19, and 22; Legal validity of the order passed by the Superintendent of Central Excise; Interpretation of judgments by Calcutta High Court, Supreme Court, and Bombay High Court; Res judicata principle based on dismissal of Special Leave Petition; Proper procedure for classification under Rule 173B of the Central Excise Rules.

Detailed Analysis:
The case involves a textile company manufacturing Tyre Cord Warp Sheets, with a dispute arising over the classification of these sheets as either Fabric or Yarn under Tariff Items 18, 19, or 22. The company sought approval for classification under Tariff Item 18 based on a decision by the Calcutta High Court regarding a similar issue. The Superintendent of Central Excise warned of enforcement action if the classification was changed without approval. This led to the filing of writ petitions by the company, challenging the excise duty collected and seeking proper classification under the relevant tariff items.

The appellant's arguments relied heavily on the Calcutta High Court's decision, which held that warp sheets are considered yarn and not fabric. However, the Department cited a Supreme Court judgment emphasizing that tyre cord fabric should be classified as textile fabric under Tariff Item 22. The learned single Judge considered the Supreme Court's decision as binding and did not take into account the Bombay High Court's judgment, which supported the Calcutta High Court's classification.

During the appeal, the appellant contended that the dismissal of a Special Leave Petition by the Supreme Court affirmed the Calcutta High Court's decision, acting as res judicata. However, the Court emphasized the need to prove the method of manufacture for each case and highlighted the authority's right to classify or reclassify goods under the relevant tariff item as per Rule 173B of the Central Excise Rules.

The Court directed the proper officer to pass a considered order on the classification application made by the appellant under Rule 173B(4), emphasizing the importance of providing reasons for the chosen tariff item. The findings of the learned single Judge were set aside, leaving the classification question open for the proper officer's determination to ensure the future collection of excise duty is not affected. The Court concluded by disposing of the Writ Appeals without any costs.

In summary, the judgment addressed the classification dispute of Tyre Cord Warp Sheets, emphasizing the proper procedure for classification under the Central Excise Rules and the authority's discretion in determining the appropriate tariff item. The Court's decision focused on the need for a reasoned order from the proper officer to avoid future disputes and ensure clarity in excise duty collection.