1996 (1) TMI 257 - AT - Central Excise

Summary

Issues:
Classification of goods - Tarpaulin cloth under Chapter Heading 52.07 or Tariff Heading 59.06.

Detailed Analysis:

Issue: Classification of goods - Tarpaulin cloth under Chapter Heading 52.07 or Tariff Heading 59.06

The case involved multiple appeals seeking waiver of pre-deposit of duty and penalties on tarpaulin cloth manufactured by the petitioners, challenging the classification under Chapter Heading 52.07 or Tariff Heading 59.06. The learned Consultant argued that tarpaulin cloth, being a water-proofing cotton fabric, should be classified under Chapter Heading 52.07, which covers cotton fabrics subject to water-proofing. The Department contended that the goods should be classified under Tariff Heading 59.06, referring to the impugned order and the opinion of the chemical examiner regarding the visibility of coating or impregnation on the cloth. The Consultant emphasized that the wording of Chapter 59.07 clearly differentiated between coated/impregnated textile fabrics falling under 59.06 and other fabrics. Reference was made to a letter from the Ministry of Finance expressing doubt on the classification of tarpaulin under Chapters 59 or 52. The Consultant argued that the petitioners' bona fides in classifying the goods under 52.07 should not be questioned, especially when there is doubt even within the department. The financial position of the petitioner, being a small-scale unit, was also highlighted to support the plea for waiver of pre-deposit.

The learned SDR emphasized the significant amount involved in the case and reiterated the issue of classification between Chapter Heading 52.07 and Tariff Heading 59.06. Referring to the impugned order and the opinion of experts, the SDR supported the classification under 59.06 based on the visibility of coating or impregnation on the cloth.

The Tribunal, after considering the submissions, acknowledged the high stakes involved in the matter and the recurring nature of the issue. Despite refraining from expressing an opinion on the merits of the classification, the Tribunal noted the prevalent doubt regarding the classification of tarpaulin cloth. Given the importance of early resolution and the plea of bona fides by the petitioners, the Tribunal decided to delve into the issue in-depth and analyze various factors. Both parties agreed to dispose of the matter on its merits, leading to the grant of waiver of pre-deposit of duty and penalty. The appeals were scheduled for disposal on merits on a specified date to address the recurring issue effectively.

In conclusion, the judgment focused on the classification of tarpaulin cloth under specific tariff headings, considering arguments related to water-proofing, visibility of coating, departmental doubts, and the financial position of the petitioner. The Tribunal's decision to delve deeper into the issue and grant waiver of pre-deposit highlighted the need for a comprehensive analysis and early resolution of the classification matter.