2005 (4) TMI 235 - AT - Central Excise

Summary

Issues Involved:
1. Classification of jute carpets.
2. Quantification of the disputed demand.

Issue-wise Detailed Analysis:

1. Classification of Jute Carpets:
The primary issue in Appeal No. ER-416/2000 revolves around the classification of jute carpets. The Department challenged the Order-in-Appeal dated 13th March 2000, which was in favor of the Respondent's Company. The carpets in question were manufactured by interlacement of jute yarn, cotton yarn, and polypropylene yarn, with jute predominating by weight. The Indian Jute Industries Research Association and the Departmental Chemical Examiner confirmed that jute predominated by weight in the samples tested, with no base fabric present.

The Department argued that the Commissioner (Appeals) erred by not considering Chapter Note No. 1 to Chapter 57, which defines 'carpets and other textile floor coverings' as those where textile materials serve as the exposed surface. They contended that since the exposed surface was made of polypropylene, the product should not be classified as jute carpets.

The Respondent's Company countered that the classification should be based on the predominance of jute by weight, as stipulated by Section Note 2(A) read with Section Note 14(A) of Section XI of the Central Excise Tariff. This position was upheld by the Commissioner (Appeals), who classified the carpets as jute carpets for the entire relevant period.

The Tribunal found that the Department's reliance on Chapter Note 1 of Chapter 57 was misplaced. The correct classification criterion was the predominance of jute by weight over other textile materials, as per Section Note 2(A) and Section Note 14(A) of Section XI. Since jute predominated by weight and there was no base fabric, the carpets were rightly classified as jute carpets.

2. Quantification of the Disputed Demand:
Appeal No. ER-14/2001 dealt with the quantification of the disputed demand. Following the Assistant Commissioner's Order dated 26-11-1999, the Superintendent of Central Excise issued show cause notices seeking to demand differential duty for the period from December 1992 to January 2000. The demand was confirmed by the Assistant Commissioner on 30th March 2000. The Respondent's Company appealed, and the Commissioner (Appeals) allowed the appeal, following the earlier classification decision.

The Tribunal noted that the appeal was consequential to the classification issue. Since the classification of the carpets as jute carpets was upheld, the quantification of the disputed demand based on this classification was also correct.

Conclusion:
The Tribunal dismissed both appeals filed by the Revenue, upholding the classification of the carpets as jute carpets and the quantification of the disputed demand based on this classification. The Department's interpretation of Chapter Note 1 of Chapter 57 was deemed inconsistent with the statutory provisions, and the correct classification criterion was the predominance of jute by weight.