1997 (4) TMI 305 - AT - Central Excise

Summary

Issues: Classification of resin-covered fabric for excise duty under Chapter 59 or Chapter 39.

In this case, the appellants manufactured excisable goods using resin-covered fabric obtained by dipping fiber in resin solution. The Department sought to charge duty on the fabric under Chapter 59 as "textile fabric covered with plastics." The adjudicating authority classified the fabric under Chapter 59.03, denying the benefit of a specific notification for small-scale industries. The appellants contended that the product should be classified under Chapter 39, not 59.03, based on Chapter Note 2(a)(3) of Chapter 59, which excludes products with fabric completely embedded or covered on both sides with plastics. The Test Report confirmed the fabric was coated on both sides with plastic. The appellants argued that the fabric should be classified under Chapter 39, not 59.03, as the coating could be seen with the naked eye, meeting the criteria of Chapter Note 2(a)(3).

The learned Advocate for the appellants argued that the lower appellate authority erred in its classification under Chapter 59.03, as Chapter Note 2(a)(3) does not require the fabric not to be visible with the naked eye. The Tribunal agreed, finding the lower authority misinterpreted the Chapter Note. The Tribunal allowed the appeal, noting that the product should be classified under Chapter 39, not 59.03, based on the criteria of Chapter Note 2(a)(3. The Tribunal rejected the JDR's request for remand, stating the matter was six years old, and the Test Memo was prepared with full knowledge of the Chapter Note, hence no need for further examination.

In conclusion, the Tribunal ruled in favor of the appellants, holding that the resin-covered fabric should be classified under Chapter 39, not 59.03, for excise duty purposes. The Tribunal found the lower appellate authority's classification erroneous and allowed the appeal with consequential relief. The Tribunal dismissed the JDR's request for remand, citing the age of the matter and the completeness of the Test Memo in considering the Chapter Note requirements.