1998 (12) TMI 182 - AT - Central Excise

Issues: Classification of fabric under Tariff Heading 6001.19, Benefit of Notification 109/86-C.E., Presence of base fabric, Process of tumbling dry as manufacturing process, Applicability of Notification 109/86-C.E., Time-barred demand, Imposition of penalty.

Classification of fabric under Tariff Heading 6001.19:
The case involved the classification of fabric manufactured by the appellant under Tariff Heading 6001.19. Central Excise Officers believed the fabric fell under this heading, described as knitted or crocheted fabric of other than cotton or man-made textile materials. The Additional Collector upheld this classification, treating the fabric as pile fabric and applying Section Note 14 of Section XI to ignore the base fabric's contents. The fabric was classified under Tariff Heading 6001.19 as the pile was made of woollen yarn, and the tumbling dry process was considered a manufacturing process.

Benefit of Notification 109/86-C.E.:
The appellant sought the benefit of Notification 109/86-C.E., which was denied by the Adjudicating Authority. However, the Tribunal analyzed the fabric's composition, with cotton predominating at 51.7%, viscose at 7.4%, and wool at 41.9%. The Chemical Examiner confirmed the fabric had a pile manufactured of wool. The Tribunal held that the fabric was entitled to the benefit of Notification 109/86-C.E. as cotton fiber predominated, leading to the classification under Tariff Heading 52.05.

Presence of base fabric:
The appellant argued that the fabric did not have a base fabric, emphasizing the predominance of cotton fiber. Despite the Chemical Examiner's description of the fabric as knitted pile fabric, the Tribunal disagreed with the appellant, asserting that a pile fabric must have a base. Consequently, the classification under Tariff Heading 6001.19 was deemed appropriate.

Process of tumbling dry as manufacturing process:
The Tribunal deliberated on whether the tumbling dry process constituted a manufacturing process. The appellant contended that this process did not create a new commodity and merely dried the fabric, citing a Tribunal judgment. The Tribunal agreed with the appellant, ruling that tumbling dry was not a manufacturing process, entitling the fabric to the benefit of Notification 109/86-C.E. and Tariff Heading 52.05.

Applicability of Notification 109/86-C.E.:
The Tribunal concluded that the fabric, not being a processed fabric due to the tumbling dry process, was eligible for the benefit of Notification 109/86-C.E. The fabric's predominance of cotton fiber led to its classification under Tariff Heading 52.05, resulting in the duty demand being set aside.

Time-barred demand and Imposition of penalty:
The Tribunal did not delve into the issue of whether the demand was time-barred due to the favorable decision on the other issues. Consequently, no penalty was imposed as there was no case for it. The appeal was disposed of accordingly, with the demand set aside and no penalty imposed.

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