1996 (10) TMI 261 - AT - Central Excise

Summary

Issues:
Benefit of Notification No. 65/87 for terry towels under tariff sub-heading 6301.

Analysis:
The appeal concerns the benefit of Notification No. 65/87 for terry towels manufactured by the appellants falling under tariff sub-heading 6301. The lower authority had granted the benefit of this notification to the appellants, which the revenue contested. The key issue revolves around whether the appellants' product qualifies as "made up textile articles" as per the relevant provisions. The appellant's representative argued that sewing the towel ends after cutting through dividing threads makes the towels ready for use, thus disqualifying them from being considered "made up articles" under the Central Excise Tariff. The contention was that sewing was necessary to make the towels marketable and that without it, the towels would not be ready for use. The revenue challenged the lower authority's decision to grant the benefit of the notification to the appellants.

The Counsel for the appellants argued that the towels were produced on a weft pile knitting machine, and stitching the ends was merely for enhancing the towels' value, not for making them ready for use. It was emphasized that the towels emerged through the manufacturing process connected by threads, meeting the requirements of the relevant rule. Reference was made to the HSN Explanatory Notes to support the argument that the appellants' product should be considered "made up articles." The contention was that the term should be interpreted realistically, and once the desired towel length emerged on the machine, even if connected to other lengths, it satisfied the criteria for "made up articles."

Upon considering the arguments from both sides, the Tribunal analyzed the situation. It was observed that sewing the towel ends was done for aesthetic purposes and did not make the towels ready for use as per the relevant provisions. The Tribunal noted that the emphasis in the Central Excise Tariff was on the articles being "ready for use" immediately after cutting to the desired length. Sewing the ends to give a definite dimension did not align with the requirement that the articles should be ready for use without additional sewing. The Tribunal referred to the HSN explanatory notes and concluded that the appellants' product did not qualify as "made up articles" under the notification. Therefore, the Tribunal held that the lower authority erred in granting the benefit of the notification to the appellants and allowed the revenue's appeal, setting aside the lower authority's order.