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Issues:
1. Interpretation of the term "yarn" under the Duty Entitlement Pass Book Scheme for export benefits. Analysis: The appellant exported two consignments described as viscose rayon yarn under a claim for Duty Entitlement Pass Book Scheme benefits. The department, after testing, concluded that the goods were sewing thread, not yarn. The Commissioner denied the DEPB benefit under Entry 54 limited to yarn and imposed a penalty on the appellant. The appellant argued that there is no real difference between yarn and thread, citing the definition from the Dictionary of Textiles. The product in question was two-ply twisted yarn intended for embroidery, as confirmed by the report from the Silk and Silk Art Metal Research Association (SASMIRA). The Tribunal rejected the argument that there is no difference between yarn and thread based on the definition provided in the Fairchild Dictionary. The definition clarified that thread is a type of yarn primarily used in sewing. However, the Tribunal disagreed with the Commissioner's conclusion that the DEPB benefit should not apply to the thread. The relevant Entry 54 in the DEPB schedule specifically refers to viscose yarn with 100% viscose content, without a separate entry for thread. The Tribunal noted that the DEPB schedule is not based on scientific classification but aims to neutralize customs duty on export products. The Tribunal emphasized that thread is essentially yarn that has been processed for a specific use, with yarn being the chief constituent of thread. The DEPB schedule uses broad classifications and does not follow strict scientific or trade terminology. The Tribunal criticized the Commissioner's attempt to apply precise classification from the Customs Tariff to the DEPB schedule. The Tribunal highlighted that as long as the product partially falls under the claimed entry, the benefit should not be denied. The Tribunal concluded that the DEPB scheme aims to neutralize customs duty, and the value addition achieved by exporting the product should be considered. The Commissioner's reasoning based on higher value addition to fabric to deny the credit under Entry 54 was deemed flawed. The Tribunal held that the appellant was entitled to the benefit, allowed the appeal, and set aside the impugned order.
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