2002 (3) TMI 110 - AT - Central Excise

Summary

Issues involved: Classification of processed knitted pile fabrics under Central Excise Act

Analysis:
1. Issue: Classification of processed knitted pile fabrics under Chapter 60 or Chapter 63 of the Central Excise Tariff Act.

Details: The appellants, who are processors of textile fabrics, faced a controversy regarding the classification of processed knitted pile fabrics they received in running length for further processing. The Excise Department issued Show Cause Notices classifying the fabric under Heading 63.07 as "other made-up textile articles." The appellants argued that the fabric did not meet the statutory definition of 'made up' as per Section Note 5 of Section XI, as no knitting to shape was involved in their processing.

2. Issue: Interpretation of the definition of 'made-up articles' as per Section Note 5 of Section XI.

Details: The Revenue relied on the definition of 'made-up articles' in Note 5 of Chapter XI for classification under Heading 63.07. The Asstt. Commissioner and the Commissioner (Appeals) differed in their interpretations of the Section Note, with the Asstt. Commissioner relying on clause (f) and the Commissioner (Appeals) on clause (b) of Section Note 5 to confirm the classification under Heading 63.07.

3. Issue: Contradictory judgments by different benches of the Tribunal on similar classification matters.

Details: The Tribunal noted contradictory judgments by different benches on the classification of similar products, such as terry towels, under Chapter 63. The Tribunal decided to refer the issue to a Larger Bench to resolve the inconsistency and avoid further contradictory orders. The Tribunal sought clarification on whether processed knitted pile fabric should be classified as 'made-up articles' under Chapter 63 or as processed fabric under Chapter 60 of the Central Excise Tariff Act.

Overall, the judgment highlighted the complexities in classifying processed knitted pile fabrics under the Central Excise Act, emphasizing the need for a consistent interpretation to avoid conflicting decisions. The reference to a Larger Bench aimed to provide clarity on the classification issue and streamline future decisions in similar cases.