1986 (12) TMI 268 - AT - Central Excise

Summary

Issues: Correct classification of blended yarn containing polyester, viscose, and cotton.

Analysis:
1. The issue in this case revolves around the correct classification of blended yarn containing polyester, viscose, and cotton in specific proportions. The Appellants initially paid duty under Tariff Item No. 18-III(ii) but the Assistant Collector of Central Excise reclassified it under Tariff Item 18-E, resulting in a higher duty rate of Rs. 24/- per kg.

2. Upon appeal, the Appellate Collector upheld the classification under Tariff Item 18-E, emphasizing that Tariff Item 18-III pertains to yarn where man-made cellulosic fiber predominates in weight. Since the percentage of man-made cellulosic fiber in the yarn was only 47%, the Appellate Collector rejected the plea for classification under Item 18-III and classified it as non-cellulosic yarn under Item 18-E. However, the demand for duty was limited to the normal time limit, not the enhanced time limit.

3. The Appellants' Consultant argued that cotton, being of cellulosic origin, should be considered in the classification. He contended that the expression "predominates in weight" in Tariff Item 18-III should imply that the fiber comprises over 50% of the yarn's weight. Referring to precedents, the Consultant argued for a broader interpretation of the classification criteria.

4. Citing previous decisions, the Consultant proposed that the yarn should be classified under Item 68 of the Central Excise Tariff, considering the composition of polyester, viscose, and cotton in the yarn. This argument was not presented before the lower authorities but was raised during the appeal.

5. The Department representative reiterated the lower authorities' view and opposed the classification under Item 68, stating that it was not previously submitted for consideration.

6. The Tribunal observed that the Appellants raised the plea for classification under Item 68 for the first time during the appeal. While this plea was not examined at lower levels, it was deemed a valid point of law related to the main issue of correct classification.

7. Analyzing the Central Excise Tariff, the Tribunal found that the yarn did not qualify for classification under Item 18-III as viscose fiber did not predominate over other fibers. Similarly, the yarn did not meet the criteria for classification under Item 18-E as non-cellulosic fiber did not predominate. Cotton, despite being of cellulosic origin, did not fall under the category of man-made fiber of cellulosic origin.

8. Considering the fiber composition in the yarn, the Tribunal agreed with the decision in a previous case and concluded that the yarn did not predominantly consist of man-made non-cellulosic fiber. Therefore, it was not classifiable under Item 18-E of the Central Excise Tariff.

9. Upholding the appellate decision to limit the demand for duty to the normal period, the Tribunal maintained this view.

10. Ultimately, the Tribunal classified the impugned yarn under Item 68 of the Central Excise Tariff, as suggested by the Appellants. However, the recovery of duty was restricted to the modified demand per the Appellate Collector's order, and the appeal was allowed on these terms.