1992 (5) TMI 100 - AT - Central Excise

Summary

Issues: Classification of fabric for concessional duty under Notification No. 35/84-C.E., dated 1-3-1984 based on composition after carbonisation process.

Analysis:
1. The appeal addressed the classification of a fabric by the appellants under Central Excise Tariff Item 22(1)(b) for partial duty exemption under Notification No. 35/84-C.E., dated 1-3-1984. The fabric was initially classified as "Polyester Cotton Sari 67% + 33%, carbonised" by the appellants. However, upon testing, it was found to contain 100% Polyester, leading to a denial of concessional duty by the Asstt. Collector and subsequent rejection of the appeal by the Collector (Appeals).

2. The appellants argued that even though the fabric initially contained 67% Polyester Fibre and 33% cotton, the carbonisation process eliminated the detectable cotton content. They contended that the fabric should still be eligible for concessional duty under Notification No. 35/84-C.E., dated 1-3-1984. The appellants relied on case laws to support their position, emphasizing the processing of Grey Fabrics containing 67% Polyester Fibre and 33% cotton.

3. On the other hand, the Revenue contended that post-carbonisation, the fabric consisted of 100% Polyester, rendering it ineligible for the concessional rate of duty. The Revenue argued that the final product's composition determined its duty liability, not the contents of intermediate products. They cited legal precedents to support their stance, emphasizing the importance of the final product's nature and character for classification.

4. The Tribunal examined the case records and arguments from both sides. It focused on whether the fabric, after the carbonisation process, could still be considered a blended fabric with less than 70% polyester content under Notification No. 35/84-C.E., dated 1-3-1984. Referring to the Supreme Court decision in Union of India v. Ahmedabad Manufacturing and Calico Printing Co. Ltd., the Tribunal highlighted the significance of the final product's nature for excise duty classification, disregarding intermediate stages.

5. The Tribunal acknowledged that the fabric, post-carbonisation, was indeed 100% Polyester, in line with the Supreme Court's ruling. It emphasized that the fabric's composition and character at the final production stage were pivotal for determining duty liability, disregarding the intermediate composition. The Tribunal rejected the appellants' argument that the classification should consider both intermediate and final products under the same sub-heading of the tariff.

6. In conclusion, the Tribunal dismissed the appeal, aligning with the principle that duty liability is determined based on the final product's nature and character after all manufacturing processes are completed. The Tribunal emphasized the irrelevance of intermediate stages in classifying goods for excise duty, in line with legal precedents and the specific facts of the case.