2001 (4) TMI 112 - AT - Central Excise

Summary

Issues involved:
Dutiability of cotton soft waste prior to the amendment of Chapter 52 of Central Excise Tariff w.e.f. 26-5-1995.

Analysis:

1. Dutiability of Cotton Soft Waste:
The appeal concerns the dutiability of cotton soft waste before the amendment of Chapter 52 of Central Excise Tariff in 1995. The dispute arose due to differing opinions among Division Benches. The appellants, a 100% EOU engaged in cotton yarn manufacturing, were issued a show cause notice regarding duty on waste products. The Dy. Commissioner held no duty was payable for soft waste cleared before 26th May 1995, but confirmed duty demand for hard waste. An appeal was filed by the Department, arguing that duty should have been confirmed for soft waste pre-amendment. The Commissioner (Appeals) upheld the Department's view, citing the proviso to Section 3 of the Act, linking excise duties to Customs Act provisions. The appellants contended that excisable goods, as per Section 2(d) of the Central Excise Act, must be specified in the Central Excise Tariff Schedule. They argued that soft waste was not excisable before the amendment as it was not covered under the relevant tariff heading. The Tribunal examined the waste items in question, determining they did not fall under the tariff entry pre-amendment, thus not being excisable goods liable to duty.

2. Legal Position and Interpretation:
The legal issue revolved around whether cotton soft waste was subject to excise duty prior to the 1995 amendment. Section 3 of the Central Excise Act mandates duties on excisable goods specified in the Central Excise Tariff. The relevant tariff heading, 52, specified 'waste yarn (hard waste)' before the amendment. The dispute centered on whether soft waste fell under this entry. The Tribunal found that the waste in question, soft waste like flat waste and comber noils, did not match the specified hard waste or garnetted stock under the heading. Despite the Department's argument referencing garnetted stock, the Tribunal concluded that the soft waste was not covered by the tariff entry and, therefore, not excisable goods liable to duty. The Tribunal rejected the Department's reliance on other case laws and emphasized the specific facts of the present case in determining the excisability of the soft waste.

3. Decision and Conclusion:
The Tribunal upheld the Deputy Commissioner's decision that cotton soft waste was not subject to excise duty before the 1995 amendment, as it was not specified in the Central Excise Tariff. The Tribunal ruled in favor of the assessee, allowing their appeals and overturning the Commissioner (Appeals) order. The decision was based on the fact that soft waste did not meet the criteria of excisable goods under the relevant tariff heading, thus not being liable to duty pre-amendment. The Tribunal's decision clarified the legal interpretation regarding the dutiability of soft waste before the specific amendment date.

This detailed analysis outlines the legal arguments, interpretations, and the Tribunal's decision regarding the dutiability of cotton soft waste before the 1995 amendment of Chapter 52 of the Central Excise Tariff.