2004 (11) TMI 161 - AT - Central Excise

Summary

Issues: Determination of excisability of "first punched web" as produced by the respondents.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Bangalore involved the issue of whether the "first punched web" produced by the respondents was excisable goods liable to duty. The Department contended that the first punched web was a semi-finished non-woven material falling under CETA Heading 5602.90, attracting duty at 15%, while the final product, jute floor coverings, was classified under CETA Sub-Heading 5703.20 with a nil rate of duty. The Department raised demands based on this classification. However, the Assistant Commissioner of Central Excise, in separate Orders-in-Original, dropped the demands, stating that the product did not satisfy the test of marketability. The Commissioner (Appeals) upheld these orders, leading to the appeals before the Tribunal.

It was established that the product in dispute was a mass of polypropylene fibers in web form, with minimal cohesion between the fibers, making it easy to disintegrate by pulling apart. No adhesives were used for bonding the fibers. The Tribunal noted that the product did not meet the criteria of marketability as felt, as defined in the HSN Explanatory Notes, which requires a more compact and interlocked structure obtained through specific processes like moistening, pressure, and rubbing. The Department failed to provide evidence showing the marketability of the first punched web.

The Tribunal rejected the Department's argument that the product was comparable to felt and therefore marketable. It distinguished a previous decision cited by the Department, emphasizing that the product in question was not fully needle punched like in the cited case. The Tribunal also referenced another case where the demand on felt was set aside due to lack of proof of marketability. Ultimately, the Tribunal upheld the impugned order and dismissed the appeals, as there was insufficient evidence to establish the marketability of the first punched web, thus not making it excisable goods liable to duty.