1999 (2) TMI 189 - AT - Central Excise

Summary

Issues Involved:
1. Classification of yarn made from artificial staple fibre (ASF) and synthetic waste.
2. Eligibility for concessional duty rate under Notification No. 53/91-C.E.
3. Interpretation of "synthetic textile material" under the relevant notification.

Detailed Analysis:

1. Classification of Yarn Made from ASF and Synthetic Waste:
The respondents are engaged in manufacturing various types of yarns and filed a classification list for yarns of artificial staple fibre (ASF). The Assistant Collector approved the classification for some products but ordered provisional assessment for others, pending final approval. A show cause notice was issued regarding the classification of certain products under sub-heading 5505.00 and the applicable duty rate.

2. Eligibility for Concessional Duty Rate under Notification No. 53/91-C.E.:
The primary issue is whether yarn manufactured from ASF and synthetic waste qualifies for a concessional duty rate under Sl. No. 14(a) of Notification 53/91-C.E. The Assistant Collector approved the classification with a concessional rate of duty, but the Revenue appealed, arguing that the yarn should attract a higher duty rate as per Sl. No. 14(b) of the notification.

3. Interpretation of "Synthetic Textile Material":
The lower appellate authority relied on the Tribunal's judgment in the case of CCE v. Priyadarshini Spinning Mills Ltd., which held that synthetic waste does not qualify as ASF. The Tribunal concluded that synthetic waste used in manufacturing ASF does not contain synthetic fibre, thus not meeting the criteria for concessional duty under Sl. No. 14(a) of Notification 53/91-C.E. The lower appellate authority also noted that the Chemical Examiner's test reports did not conclusively determine the nature of the waste used.

Tribunal's Findings:
The Tribunal examined whether the yarn containing synthetic waste qualifies for the concessional duty rate under Notification 53/91-C.E. The Tribunal observed that the expression "not containing any synthetic textile material" is crucial. According to Section Note 2(D) of Section XI of the Schedule to CETA, 1985, "synthetic textile material" includes synthetic waste. Therefore, yarn containing synthetic waste does not qualify for the concessional rate under Sl. No. 14(a).

Revenue's Argument:
The Revenue argued that the lower appellate authority incorrectly equated "synthetic textile material" with "synthetic staple fibre." The Revenue also pointed out that the explanation inserted in the notification on 1-3-1992 clarifies that synthetic waste is considered synthetic textile material, supporting their stance even for the period before the insertion.

Conclusion:
The Tribunal concluded that the lower authorities erred by equating synthetic waste with synthetic staple fibre. The yarn containing synthetic waste does not meet the criteria for concessional duty under Sl. No. 14(a) of Notification 53/91-C.E. Consequently, the higher duty rate under Sl. No. 14(b) applies. The Tribunal allowed the Revenue's appeal and dismissed the appeals of the assessees.

Final Judgment:
The appeal of the Revenue is allowed, and the appeals of M/s. Modern Syntex (I) Ltd. and M/s. Modern Thread (India) Ltd. are dismissed.