1997 (3) TMI 209 - AT - Central Excise

Summary

Issues: Classification of 100% Acrylic Yarn under tariff sub-heading 5504.32 and the question of time bar for duty recovery.

Classification Issue Analysis:
The case involves a dispute over the classification of 100% Acrylic Yarn under the Central Excise Tariff. The appellants were initially informed by the Superintendent of Central Excise that their product falls under tariff sub-heading 5504.32, allowing clearance at a nil rate of duty. However, a subsequent show cause notice contended that the yarn should be classified under 5504.90, leading to a demand for duty payment. The main contention revolved around the interpretation of the expression "predominates by weight" in the context of sub-heading 5504.32. The Revenue argued that this expression implies the presence of more than one variety of yarn in a product, excluding 100% Acrylic Yarn. On the other hand, the appellants argued that sub-heading 5504.32 includes yarn not containing more than one-sixth by weight of other synthetic staple fibers, encompassing 100% Acrylic Yarn as well. They also highlighted a subsequent amendment in the 1991 Budget that removed the expression "predominates by weight," supporting their interpretation. The Tribunal agreed with the appellants, emphasizing that the inclusion of the phrase "not containing" in sub-heading 5504.32 would be redundant if the Revenue's interpretation were accepted. Therefore, the Tribunal held that the classification of 100% Acrylic Yarn under sub-heading 5504.32 was appropriate during the relevant period.

Time Bar Issue Analysis:
Regarding the question of time bar for duty recovery, the appellants argued that the classification approved by the Revenue under 5504.32 was not changed before the issuance of the show cause notice, and thus the demand should be prospective from the notice date. Citing a Supreme Court judgment in a similar context, they sought relief based on this argument. The Revenue, represented by the SDR, contended otherwise, referring to another Supreme Court judgment delivered by three judges, which they believed was more relevant. The Tribunal, having resolved the classification issue in favor of the appellants, deemed it unnecessary to delve into the time bar question. Consequently, the Tribunal allowed the appeal and the Stay Petition, providing consequential relief to the appellants.

This judgment by the Appellate Tribunal CEGAT, CALCUTTA, clarified the classification of 100% Acrylic Yarn under the Central Excise Tariff and addressed the time bar issue for duty recovery. The decision favored the appellants' interpretation of sub-heading 5504.32, emphasizing the significance of the phrase "not containing" in the classification. The Tribunal's analysis underscored the impact of subsequent amendments and the redundancy of interpretations conflicting with the clear wording of the tariff sub-heading.