1990 (10) TMI 172 - AT - Central Excise

Issues: Classification of varnished glass sleevings under Tariff Item 22B or 22F, Time-barred duty demand, Classification dispute between Tariff Item 22B and 22F

Classification of varnished glass sleevings under Tariff Item 22B or 22F:
The appeal addressed the classification issue of varnished glass sleevings manufactured from fiber glass yarn by a braiding process under Tariff Item 22B or 22F. The appellant argued for classification under Tariff Item 22F, while the Department contended for classification under Tariff Item 22B. The process involved dipping raw fiber glass sleeves in varnish, drying them, and cutting them to desired lengths. The Appellate Collector initially classified the goods under Tariff Item 22B as textile fabrics, coated with cellulose derivatives or plastic material. However, the appellant claimed exemption under Notification No. 87/76 for goods classified under Tariff Item 22F. The dispute centered on whether the predominance of fiber or varnish weight determined the classification. The judgment highlighted the appellant's bona fide belief in the classification under Tariff Item 22F and the Department's reliance on Trade Notices for classification under Tariff Item 22B.

Time-barred duty demand:
The appeal also addressed the time-barred duty demand issue related to the demand of duty imposed beyond the ordinary limitation period of six months. The appellants argued that the duty demand was barred by limitation as they believed their products fell under Tariff Item 22F and were covered by Notification 87/76. The judgment noted the correspondence between the appellants and the Department regarding the classification of the goods. It highlighted that the appellants had a genuine belief in the classification under Tariff Item 22F and exemption eligibility, while the Department relied on Trade Notices for classification under Tariff Item 22B. The judgment concluded that there was no suppression of facts by the appellants justifying the extended period of limitation, thus ruling the demand as time-barred.

Classification dispute between Tariff Item 22B and 22F:
The judgment analyzed the classification dispute between Tariff Item 22B and 22F for the glass fiber fabrics. It referenced technical literature establishing glass fabrics as textile fabrics with various applications like insulation, reinforcement for plastics, and upholstery. The judgment cited previous Tribunal and High Court decisions regarding the classification of braided fiber-glass sleevings under Tariff Item 22F. It emphasized the pre-dominance test of mineral fiber or yarn weight for classification under Tariff Item 22F. The judgment highlighted the need for a chemical test to determine the composition of the disputed product to ascertain the pre-dominance of fiber or varnish content. Consequently, the matter was remanded for further adjudication by the Collector (Appeals) after conducting the necessary tests and providing a hearing opportunity to the appellants.

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