1998 (12) TMI 289 - Commissioner - Central Excise

Summary

Issues:
Classification of processed embroidery fabrics under Chapter sub-heading 5805.13 for duty exemption.

Analysis:
The case involves a review appeal filed by the Assistant Commissioner of Central Excise against the Order-in-Original passed by the Commissioner-II of Central Excise. The respondent had classified their product, processed embroidery fabrics, under Chapter sub-heading 5805.13, claiming a Nil rate of duty based on a Board's letter. A show cause notice was issued for denial of the exemption, which was adjudicated in favor of the respondent, leading to the department filing an appeal for review.

During the personal hearing, the respondent cited past clarifications by the Ministry of Finance regarding the dutiability of embroidered fabrics. The Ministry's circular stated that once base fabric is converted into embroidery, it falls under a different tariff sub-item and will not be classified under the base fabric's tariff sub-item even after processing. The respondent also referred to a previous decision by the Commissioner (Appeals) in a similar case, emphasizing that the embroidery should not be considered as fabrics under Chapter 58.

The Commissioner noted that the impugned order correctly held that processed embroidery fabrics are chargeable to a nil rate of duty. The department's appeal lacked a convincing explanation for challenging the lower authority's decision. The Commissioner found the Ministry's instructions and the Commissioner (Appeals)'s detailed reasoning sufficient to reject the department's appeal. The impugned order was deemed consistent with government decisions and previous appellate decisions, leading to the rejection of the appeal.

In conclusion, the Commissioner did not find any reason to interfere with the impugned order, and thus, the appeal was rejected. The case highlights the importance of proper classification and duty implications for processed embroidery fabrics under the relevant tariff sub-items, based on past clarifications and legal interpretations.