1986 (10) TMI 200 - AT - Central Excise

Summary

Issues: Classification of yarn under Central Excise Tariff - Item 18 or Tariff Item 68

In this judgment by the Appellate Tribunal CEGAT, New Delhi, the main issue revolves around the classification of a specific type of yarn, termed as "Fancy Yarn," under the Central Excise Tariff. The question at hand is whether this yarn falls under Item 18 of the Central Excise Tariff or under Tariff Item 68. The lower authorities had classified the yarn under Tariff Item 68, while the appellants argued that it should be classified under Item 18 due to its characteristics and usage in weaving textiles.

The appellants contended that the yarn in question, referred to as "Fancy Yarn," is essentially a type of multifold yarn falling within the ambit of Explanation II of Item 18 of the Central Excise Tariff. They argued that despite the twisting and combining of multiple strands of yarn to enhance strength and aesthetics, the product retains its fundamental character as yarn and is suitable for weaving textiles. On the other hand, the lower authorities maintained that the manufacturing process and distinct characteristics of the "Fancy Yarn" warranted its classification under Tariff Item 68 as a separate product category.

Upon careful consideration of the arguments presented by both parties, the Tribunal analyzed the description of the yarn in question in relation to the Central Excise Tariff. The Tribunal observed that the "Fancy Yarn" produced by the appellants, created by twisting several strands of Cellulosic Spun Yarn, aligns with the description provided under Tariff Item 18III of the Central Excise Tariff. The Tribunal emphasized that the product falls within the definition of Cellulosic Spun Yarn as outlined in the said Tariff Item, thereby justifying its classification under Item 18.

Furthermore, the Tribunal distinguished the present case from a previous decision involving the classification of yarn, highlighting that the product under consideration is akin to multiple fold yarn, which is explicitly covered under the relevant Tariff Item. Drawing parallels to a precedent involving multiple fold Cotton Yarn, the Tribunal emphasized that both single yarn and multiple fold yarn are variations of the same commodity within the Central Excise Tariff framework. Consequently, the Tribunal allowed the appeal, ruling in favor of classifying the "Fancy Yarn" under Item 18 of the Central Excise Tariff based on its characteristics and conformity with the tariff description.

In conclusion, the Tribunal's judgment clarifies the classification of the "Fancy Yarn" under the Central Excise Tariff, emphasizing its alignment with the description provided under Tariff Item 18III and rejecting the classification under Tariff Item 68. The decision underscores the importance of interpreting the tariff descriptions accurately to determine the appropriate classification of goods, ensuring consistency and adherence to established legal principles within the realm of excise classification.