1994 (4) TMI 132 - AT - Central Excise

Summary

Issues:
Classification of jacquered towels under Heading 5802.11 or 5802.12 of the Central Excise Tariff Act.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the classification of jacquered towels under Heading 5802.11 or 5802.12 of the Central Excise Tariff Act. The appellants argued that the towels should be classified under sub-heading 5802.11 as they were not subjected to any further process after emerging from the loom. They contended that the towels were made from bleached/dyed yarn and did not undergo additional processing. The appellants relied on Circular No. 7/91-CX. I issued by the Board, which stated that jacquered terry towelling fabrics not subjected to further processing should be classified under sub-heading 5802.11.

On the other hand, the Department argued that the towels should be classified under Heading 5802.12 based on the analogy of a judgment by the Madras High Court. The Department contended that the towels, even though not subjected to dry or wet finishing operations, should be classified under Heading 5802.12 as they were processed fabrics. The Department emphasized that the Board's clarification was not binding and that the decision of the Madras High Court was more relevant in this case.

Upon careful consideration, the Tribunal found that the Madras High Court's judgment was based on the old tariff and an exemption notification, which was not directly applicable to the current case. The Tribunal noted that the Central Excise Tariff Act clearly distinguished between cotton fabrics not subjected to any process (5802.11) and those subjected to processing (5802.12). Since the jacquered towels in question were not subjected to any further process after manufacturing and were made from bleached/dyed yarn, they were rightly classified under Heading 5802.11 as argued by the appellants.

A dissenting opinion was presented by one Member who believed that the Madras High Court's decision was applicable to the current appeal, emphasizing the issue of whether the towels should be considered 'grey' or 'processed.' However, the majority view prevailed, leading to the classification of jacquered towels under sub-heading 5802.11 of the Central Excise Tariff Act. The appeal was allowed based on this classification.

In the final order, it was concluded that jacquered towels made from dyed/bleached yarn and not subjected to further processing should be classified under sub-heading 5802.11 of the Central Excise Tariff Act. The majority view supported this classification, resulting in the appeal being allowed.