1998 (2) TMI 316 - AT - Central Excise

Summary

Issues:
Classification of product for excise duty - Benefit of Notification 65/87-C.E. - Commercial parlance determining classification

Analysis:
The case involved a dispute regarding the classification of a product for excise duty and the applicability of Notification 65/87-C.E. The respondents had initially claimed the benefit of the notification for a product described as "sacks and bags of jute - D.W. Tarpaulin bag with Polyliner." However, the Revenue authorities issued a show cause notice questioning the eligibility for the benefit, citing that the product was not entirely made of jute and was not known in the trade as sacks and bags of jute. The Assistant Collector of Central Excise subsequently withdrew the benefit based on the grounds that the lower duty rate applied only to products made entirely of jute. The lower appellate authority, however, overturned this decision, leading to an appeal before the Tribunal.

The lower appellate authority examined the manufacturing process of the product, noting that the bags were made from jute fabrics with a polyliner tube inserted before packing. It determined that the jute provided the essential character to the goods, classifying them as "sacks and bags of jute" covered by the notification. The authority also considered the commercial parlance, affirming that the product was commonly known as jute bags in trade, rejecting the Assistant Collector's view that the entry covered only bags made entirely of jute.

In the Tribunal, the Revenue's representative argued that the product did not qualify for the notification benefit as it was not entirely made of jute and was known differently in commercial parlance. The representative criticized the vagueness of the adjudicating authority's findings and highlighted distinctions between various jute products in commercial terms. The respondent's advocate, on the other hand, cited a previous judgment supporting the application of the notification to similar products, urging the dismissal of the Revenue's appeal.

The Tribunal, after considering both arguments, relied on a direct judgment of the Calcutta High Court in a similar case, which favored the respondents. The High Court's decision clarified that the lower duty rate was not restricted to products made entirely of jute and confirmed that the disputed product was recognized in the market as jute bags. Given the absence of conflicting judgments and the authoritative precedent, the Tribunal dismissed the Revenue's appeal, upholding the lower appellate authority's decision in favor of the respondents.