2019 (5) TMI 809 - AT - Central Excise

Classification of goods - Laces - whether the goods manufactured are Laces and not Braid - retesting of samples denied - whether classified as lace under Chapter Heading No. 58.04 of CETA, 1985 or otherwise? - HELD THAT - Although CRCL given a report, but, the said report has been challenged by the appellant vide its letter dated 17.05.2004 on the basis of various case laws and requested to visit their factory to know the manufacturing process as well as the machinery is used, but, the said request has not been accepted - In the CBEC Central Excise Manual, the procedure for retested is provided. Admittedly, in this case, the appellant has ask for retest and same has been denied on the flimsy ground, therefore, there is a violation of principle of natural justice. In the case of M/S ORIENT APPARELS PVT. LIMITED VERSUS CCE, DELHI 2017 (4) TMI 689 - CESTAT NEW DELHI this Tribunal has examined the issue and after relying on the report of Department of Textile Technology, IIT, Delhi and the Technological Institute of Textile Sciences, Bhiwani observed that to determine the classification in the case of braid and laces, examination of process of manufacture is required. Admittedly, in the present case, while determining the classification by the CRCL, no process of manufacturing was examined and retest of the samples were denied - There is a gross violation of principle of natural justice. Appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of product under Chapter Heading No. 58.04 of CETA, 1985; Violation of principle of natural justice in denying re-testing of samples.

Classification Issue Analysis:
The appellant contested the classification of their product as lace under Chapter Heading No. 58.04 of CETA, 1985, arguing that they were manufacturing braids, not laces. The appellant relied on a report by CRCL which stated that the product had characteristics of lace due to the inter-twisting of cotton yarn. However, the appellant challenged this report and requested re-testing, which was denied. The Tribunal noted that the denial of retesting without valid reasons constituted a violation of the principle of natural justice. In a similar case precedent, it was established that declining a re-test request amounts to a violation of natural justice. The Tribunal emphasized that to determine the classification between braid and lace, an examination of the manufacturing process is crucial. Since the CRCL did not examine the manufacturing process and denied retesting, the Tribunal concluded that there was a gross violation of natural justice. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

Violation of Natural Justice Issue Analysis:
The denial of the appellant's request for re-testing of the samples was a key point of contention in this case. The appellant argued that the report by CRCL, which classified the product as lace, was not admissible due to the denial of re-testing. The Tribunal found that the denial of retesting on flimsy grounds violated the principle of natural justice, as established in previous case law. The Tribunal highlighted that in a previous case involving a similar issue, it was held that declining a re-test request constitutes a violation of natural justice. Moreover, the Tribunal noted that the examination of the manufacturing process is essential to determine the classification between braid and lace. Since the CRCL report did not consider the manufacturing process and retesting was denied, the Tribunal concluded that there was a significant violation of natural justice. As a result, the impugned order was deemed to have no merit and was set aside, with the appeal being allowed along with consequential relief.

This detailed analysis of the judgment addresses the issues of classification under Chapter Heading No. 58.04 of CETA, 1985 and the violation of the principle of natural justice in denying re-testing of samples. The Tribunal's decision was based on the lack of examination of the manufacturing process and the denial of retesting, which were deemed to be significant violations of natural justice, leading to the setting aside of the impugned order and the allowance of the appeal with consequential relief.