1995 (8) TMI 187 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Cellulosic Spun Yarn
2. Validity of the Order by the Collector of Central Excise (Appeals), Bombay
3. Interpretation of Tariff Item 18-III of the Old Central Excise Tariff
4. Applicability of Previous Tribunal and Supreme Court Decisions

Issue-wise Detailed Analysis:

1. Classification of Cellulosic Spun Yarn:
The primary issue in the appeal was the classification of cellulosic spun yarn made from polyester fibre waste, cotton, and viscose staple fibre. The respondents classified the yarn under Item No. 18-III(i), which covers cellulosic spun yarn not containing man-made fibres of non-cellulosic origin. However, the Revenue argued that the yarn should be classified under Item No. 18-III(ii), which includes cellulosic spun yarn containing man-made fibres of non-cellulosic origin. The Assistant Collector of Central Excise, Ahmedabad, initially held that the yarn was correctly classifiable under Item No. 18-III(ii). On appeal, the Collector of Central Excise (Appeals), Bombay, relying on a previous order, classified it under Item No. 18-III(i).

2. Validity of the Order by the Collector of Central Excise (Appeals), Bombay:
The Revenue challenged the order of the Collector of Central Excise (Appeals), Bombay, arguing that it was incorrect. The Revenue's representative, Shri Mohan Lal, stated that since the yarn contained man-made fibres of non-cellulosic origin, it should be classified under Item 18-III(ii). The Tribunal considered the matter ex-parte as there was no representation from the respondents.

3. Interpretation of Tariff Item 18-III of the Old Central Excise Tariff:
The Tribunal examined the classification criteria under Tariff Item 18-III, which differentiates between cellulosic spun yarn not containing man-made fibres of non-cellulosic origin (Item 18-III(i)) and those containing such fibres (Item 18-III(ii)). The respondents argued that waste could not be equated with fibre. However, the Tribunal noted that the tariff entry uses the term "containing," and the key consideration was whether the yarn contained man-made fibres of non-cellulosic origin.

4. Applicability of Previous Tribunal and Supreme Court Decisions:
The Tribunal referenced several decisions, including Modern Syntex (I) Ltd. v. CCE, Jaipur, and CCE, Hyderabad v. Priyadarshini Spg. Mills Ltd., to support its analysis. The Tribunal emphasized that yarns are classified based on their fibre content, and in the case of mixed/blended yarn, the respective percentages of different fibres determine its classification. The Tribunal also cited the Supreme Court's decision in CCE v. Rajasthan Spinning & Weaving Mills, which classified blended/composite yarn containing polyester, viscose, and acrylic based on the fibre content.

The Tribunal concluded that the spun yarn in question contained man-made fibres of non-cellulosic origin, as evidenced by the manufacturing process described by the respondents. The Tribunal held that the yarn was correctly classifiable under Item 18-III(ii) of the old Central Excise Tariff. The Tribunal also noted that previous decisions, such as those in the Priyadarshini and Kerala Spinners cases, did not warrant a change in their conclusion.

Conclusion:
The Tribunal accepted the appeal of the Revenue and set aside the impugned order of the Collector of Central Excise (Appeals), Bombay. The yarn was classified under Item 18-III(ii) of the old Central Excise Tariff, as it contained man-made fibres of non-cellulosic origin.