2003 (12) TMI 118 - AT - Central Excise

Summary

Issues Involved:
1. Classification of crimped uncut waste under Central Excise Tariff.
2. Compliance with remand directions by the Tribunal.
3. Validity of Chemical Examiner's report and request for retest.
4. Consideration of Board's Circular and expert opinion from IIT.
5. Emergence and treatment of waste during the manufacturing process.
6. Determination of duty liability and classification of the waste.

Detailed Analysis:

1. Classification of Crimped Uncut Waste:
The primary issue in this appeal is whether crimped uncut waste should be classified under sub-heading 5503.19 as waste, as claimed by the appellants, or under sub-heading 5501.20 as polyester tow or staple fibre. The appellants argued that the waste arises during the drawing and crimping process and contains defects such as uneven crimps and fused portions, making it unsuitable as polyester staple fibre. The Commissioner, however, classified it under sub-heading 5501.20, asserting that crimping is not essential for the final product and relying on HSN Explanatory Notes.

2. Compliance with Remand Directions by the Tribunal:
The Tribunal had remanded the matter twice, directing the Commissioner to consider the re-test of samples, the Board's Circular, and the expert opinion from IIT Delhi. However, the Commissioner failed to comply with these directions and reiterated the earlier findings without conducting the re-test or considering the expert opinion and the Board's Circular, leading to the Tribunal setting aside the impugned order.

3. Validity of Chemical Examiner's Report and Request for Retest:
The appellants contested the Chemical Examiner's report and requested a re-test, which was initially denied. The Tribunal noted that steps for re-testing were taken but not completed, and the right to re-test was not forfeited. The Commissioner's refusal to conduct a re-test and reliance on the initial report was deemed non-compliant with the Tribunal's directions.

4. Consideration of Board's Circular and Expert Opinion from IIT:
The Board's Circular dated 15-12-1989 clarified that waste could arise during the crimping process and should be classified under Heading 55.03. The Commissioner disregarded this Circular, which was binding, and also dismissed the IIT report on the grounds that the sample was not drawn in the presence of departmental officers. The Tribunal found this dismissal unjustified, emphasizing that the IIT report concluded the waste did not have the characteristics of polyester staple fibre.

5. Emergence and Treatment of Waste During the Manufacturing Process:
The Tribunal recognized that waste is an inevitable by-product in the manufacture of synthetic filament and tow, as supported by the Swadeshi Polytex and Reliance Industries cases. The appellants' process of crimping and the resultant waste were consistent with industry standards, and the Tribunal rejected the Commissioner's view that no waste should emerge.

6. Determination of Duty Liability and Classification of the Waste:
The Tribunal concluded that the classification under sub-heading 5501.20 was based on incorrect assumptions and non-compliance with remand directions. The Chemical Examiner's report did not address whether the sample contained defects to be treated as waste. The Tribunal held that even if the waste could be used for spinning, it did not cease to qualify as waste. Consequently, the appeal was allowed, setting aside the impugned order and granting consequential relief to the appellants.

Conclusion:
The Tribunal's detailed analysis underscored the necessity of adhering to procedural directions, considering expert opinions and binding circulars, and recognizing the technical realities of manufacturing processes. The appeal was allowed, and the classification of crimped uncut waste under sub-heading 5503.19 was affirmed, providing relief to the appellants.