2001 (1) TMI 167 - AT - Central Excise

Summary

Issues: Classification of water proof fabrics under Heading 52.07 or 59.06, challenge on the demand of duty based on limitation.

In the judgment, the issue revolved around the classification of water proof fabrics manufactured by the appellants under Heading 52.07 or 59.06. The Department argued that the fabrics were "coated" and should fall under Chapter 59, while the appellants contended that water proofing is a distinct process mentioned in Heading 52.07, not leading to coating with a layer formation on the fabrics. The appellants relied on Board Circulars and previous Tribunal decisions to support their classification under Chapter 52, attracting nil rate of duty. The Tribunal considered the process of manufacturing canvas fabrics, noting that the process of water-proofing did not involve impregnation, coating, or lamination. Referring to a previous decision involving similar facts, the Tribunal held that the water proof fabrics were correctly classifiable under Chapter 52, in line with the decision's ratio. Thus, both appeals were allowed by setting aside the impugned Orders.

Regarding the challenge on the demand of duty based on limitation, since the appellants were allowed on merits, no specific Orders were passed on this point. The Tribunal's decision was based on the classification issue, where the process of water-proofing without coating led to the classification under Heading 52.07, aligning with previous decisions and commercial understanding. The judgment provided a detailed analysis of the manufacturing process, legal interpretations, and precedents to support the classification decision, ultimately favoring the appellants and setting aside the Department's contentions.