1997 (4) TMI 270 - AT - Central Excise

Summary

Issues:
Classification of round mesh mosquito nettings under the Central Excise Tariff Act, 1985 post-amendment in 1995.

Detailed Analysis:

1. Classification Dispute: The case involved a dispute regarding the classification of round mesh mosquito nettings manufactured by the respondents under the Central Excise Tariff Act, 1985. The respondents initially classified the goods under sub-heading 5804.90, but the Asstt. Commissioner Central Excise, Division III, Ahmedabad disagreed and proposed classification under sub-heading 5804.11 after the amendment in the 1995 budget. This led to demands for duty totaling Rs. 14,65,999.71, which were confirmed by the Asstt. Commissioner's order dated 23-4-1996. The Commissioner of Central Excise (Appeals) later allowed the appeal against this order, prompting the present appeal by the Commissioner of Central Excise, Ahmedabad.

2. Appellant's Argument: The ld. SDR contended that the amendment broadened the scope of sub-heading 5804.11 to cover products of Heading 58.04 manufactured with power or steam, including those previously classified under 5804.90. Therefore, the round mesh mosquito nettings made of cotton and manufactured with power should be reclassified under sub-heading 5804.11, as correctly held by the Asstt. Commissioner.

3. Respondents' Argument: The respondents' counsel argued that the goods in question are woven fabrics, not explicitly covered under Heading 58.04. They suggested that the amendment to Heading 52.07, covering woven fabrics of cotton, should be preferred for classification. Additionally, they sought Modvat credit on inputs based on a previous Tribunal decision.

4. Judgment Analysis: The Tribunal analyzed the pre-amendment and post-amendment versions of Heading 58.04 and the relevant sub-headings. It concluded that the amendment expanded the scope to include products manufactured with power or steam under sub-headings 5804.11, 5804.12, or 5804.19, which were previously under 5804.90. Therefore, the round mesh mosquito nettings made of cotton were correctly classified under sub-heading 5804.11 post-amendment. The Tribunal also rejected the respondents' argument for classification under Heading 52.07 and upheld the Asstt. Commissioner's classification.

5. Modvat Credit: The Tribunal considered the respondents' plea for Modvat credit on inputs under Rule 57A of Central Excise Rules. Citing a previous decision, the Tribunal directed the Asstt. Commissioner to consider extending Modvat credit, given the circumstances of the case where the respondents contested the classification and succeeded before the Commissioner (Appeals).

6. Disposition: The appeal was disposed of, setting aside the impugned order and directing the Asstt. Commissioner to consider the extension of Modvat credit to the respondents based on the use of inputs in the final product and their duty paid status.