1995 (1) TMI 157 - AT - Central Excise

Summary

Issues: Interpretation of Notification No. 252/82-C.E. regarding the rate of duty on fents and rags arising from cotton fabrics.

In the judgment delivered by the Appellate Tribunal CEGAT, New Delhi, the issue revolved around the interpretation of Notification No. 252/82-C.E., dated 8-11-1982, concerning the rate of duty on fents and rags arising from cotton fabrics. The CCE (Appeals), Madras, in one order, held that the duty rate should be linked with the value of the cotton fabrics from which the fents and rags arise, not the value of the fents and rags themselves. This decision was challenged by the Department. On the other hand, the Collector (Appeals) took a different stance, stating that the value of the cotton fabrics should be considered for the computation of duty on fents and rags. The Assessee appealed against this order. The dispute essentially centered on whether the duty rate should be based on the value of the fabric or the value of the fents and rags.

The Tribunal analyzed the language of the notification, which specified that the duty rate for fents and rags should be determined based on the value of the cotton fabrics from which they arise. The notification referred to "such cotton fabrics," indicating the fabrics out of which the fents and rags originated. The Tribunal acknowledged that while the duty calculation should consider the fabric's value, the actual duty amount would be ad valorem based on the fents and rags' value. The Tribunal recognized that fents and rags, being smaller pieces of fabric, generally have a lower value compared to the main fabric. However, it emphasized that the notification's clear language mandated considering the main fabric's value for determining the duty rate under the notification.

Regarding the situation where the entire length of fabric is defective and cut into fents and rags, the Tribunal agreed that in such cases, the value of the defective fabric should be considered. However, the Assessee would need to substantiate the lower value of the defective fabric compared to similar undamaged fabric through evidence such as price lists. Ultimately, the Tribunal held that for calculating the duty rate under the notification, the value of the fabric should be taken into account, while for the actual duty calculation, the value of the fents and rags themselves should be considered. The Department's appeal was upheld, setting aside the Collector (Appeals)'s order and reinstating the Assistant Collector's decision.

In conclusion, the Tribunal clarified that for determining the duty rate, the value of the cotton fabrics should be considered, not the value of the fents and rags. The judgment confirmed that the duty rate should be linked to the main fabric's value, while the duty amount should be ad valorem based on the fents and rags' actual value. The decision provided clarity on the interpretation of the notification and upheld the Department's appeal while rejecting the Assessee's appeal against the Collector (Appeals)'s order.