1987 (9) TMI 149 - AT - Central Excise

Issues Involved:
1. Eligibility of blended polypropylene yarn for duty exemption under Central Excise Notification No. 332/77.
2. Interpretation of the term "polypropylene spun yarn" in the context of the notification.
3. Applicability of the criterion of predominance in weight from Item No. 18E, CET to the notification.

Detailed Analysis:

1. Eligibility of Blended Polypropylene Yarn for Duty Exemption:
The core issue revolves around whether the blended polypropylene yarn, composed of 52% propylene and 48% viscose, qualifies for duty exemption under Central Excise Notification No. 332/77. The Assistant Collector initially denied this exemption, but the Appellate Collector upheld the respondents' claim, leading to the present appeal.

2. Interpretation of "Polypropylene Spun Yarn":
The appellant argued that the notification's exemption should apply exclusively to 100% polypropylene yarn, asserting that the term "polypropylene spun yarn" in the notification does not extend to blended yarn. They emphasized that the trade does not recognize blended yarn as polypropylene yarn.

Conversely, the respondents contended that the notification does not mandate the yarn to be entirely polypropylene. They claimed that since polypropylene is the predominant fiber in the subject yarn, it should be classified as polypropylene yarn and is known as such in the trade.

3. Applicability of Predominance Criterion from Item No. 18E, CET:
The tribunal examined whether the predominance criterion used for classifying yarn under Item No. 18E, CET, should influence the interpretation of the notification. Item No. 18E covers "non-cellulosic spun yarn" where non-cellulosic fibers predominate in weight. The tribunal noted that the notification exempts polypropylene yarn falling under Item No. 18E from excise duty.

The tribunal considered the analogy of Item No. 18A for "cotton yarn, all sorts," which includes yarn where cotton predominates in weight. Applying this analogy, the tribunal concluded that "polypropylene spun yarn" in the notification should encompass both 100% polypropylene yarn and blended yarn where polypropylene predominates.

Separate Judgments:
Majority Opinion:
The majority upheld the Appellate Collector's decision, reasoning that the expression "polypropylene spun yarn" should include yarn where polypropylene predominates, thus extending the exemption to the subject blended yarn. They emphasized that the notification should be interpreted in light of the tariff entry, which includes both 100% non-cellulosic fiber yarns and blended yarns where non-cellulosic fiber predominates.

Dissenting Opinion:
One member disagreed, arguing that the notification's plain meaning should prevail, restricting the exemption to 100% polypropylene yarn. They highlighted the absence of explicit language in the notification to include blended yarn and pointed to subsequent notifications that separately addressed polypropylene and blended yarns as evidence of the intended distinction.

President's Decision:
The President resolved the difference by siding with the dissenting opinion. They emphasized that exemption notifications should be strictly construed and that the term "polypropylene spun yarn" in the notification should be interpreted to cover only 100% polypropylene yarn. The President noted that the burden of proving eligibility for exemption lies with the claimant, and the plain meaning of the notification's language should guide its interpretation.

Final Order:
In light of the President's decision, the tribunal concluded that the subject blended yarn, where polypropylene predominates, was not entitled to the benefit of Central Excise Notification No. 332/77. Consequently, the appeal was allowed, the Appellate Collector's order was set aside, and the Assistant Collector's order was restored.

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