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1994 (11) TMI 216

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..... the ground that the petitioner was using power in the manufacture of the same using 1/2 H.P. operated machines for stitching and exemption is available only for the goods manufactured without using power. 2. Learned counsel further contended that in terms of chapter note to Heading 59.06 it would be clear that any fabric in which the impregnation, coating or covering cannot be seen with the naked eye would not be classifiable under Heading 59.06 but would fall under Chapter 50 to 55, 58 or 60 of the Central Excise Tariff. In this connection the department drew representative samples and sent it for opinion of the Dy. Chief Chemist who by his opinion dated 18-9-1992 stated that The coating/impregnation can be seen with the naked eye . On further representation the department sent the representative sample for re-testing to the Chief Chemist at Delhi who by his letter dated 13th September, 1993 gave his opinion that interstices between the yarns were not completely filled and that light passes through the interstices and warp and weft yarns of the fabrics in each of the sample are visible with naked eyes . It was submitted that along with the representative sample, similar goods .....

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..... the petitioner s balance sheet for the year ending 31st March, 1993 and urged that the unit is a partnership firm with a number of partners and the firm has made only a meagre profit of Rs. 78,000/-. 4. Shri M.K. Jain, ld. SDR opposing the application submitted that the opinion of the Dy. Chief Chemist referred to the impugned order clearly shows that the impregnation or the layer formation is clearly visible. Ld. SDR also referred to the impugned order where the process of manufacture is referred in details and contended that mere coating on the fabric would attract the Heading 59.06 of the Tariff. Ld. SDR further submitted that in the present case the petitioner is also prima facie guilty of suppression of facts inasmuch as no classification list or price list was filed much less any licence taken out by the petitioner. Ld. SDR further submitted that the petitioner did not give any reply to the show cause notice. Ld. SDR further urged that the two orders of the Collector relied upon by the ld. counsel do not clearly bring out the facts as to whether the goods therein and the goods in the present case are identical. In regard to the financial hardhsip the ld. SDR urged that the .....

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..... arn along warp and single ply yarn along weft and is composed of all cotton, Wt. per Sq. metre of the sample = 849.3 gm. .................. Each of the three samples is treated by impregnation with the preparation of waxy matter and Aluminium stearate. However, interstices between the yarns are not completely filled, light passes through the interstices, warp and weft yarns of the fabrics in each of the three samples are visible with naked eyes". Chapter Note of 5 of Heading 59.06 reads as under :- 5. Heading No. 59.06 does not apply to : (a) Fabrics in which the impregnation, coating or covering cannot be seen with the naked eye (usually Chapter 50 to 55, 58 or 60) : for the purpose of this provision, no account should be taken of any resulting change of colour; (b) Fabrics painted with designs (other than painted canvas being theatrical scenery, studio back-cloths or the like);" The Board also issued a clarification on the doubt raised on the question of classification of Tarpaulin/processed water-proofed canvas cloth on 11-4-1991 in F. No. 59/4/90-CX. 1, which reads as under :- Classification of Tarpaulin/processed water-proofed canvas cloth - Clarification - .....

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..... o 59. If the manufacturing process of water proofing is such that there is formation of a visible layer on the surface of the fabric, then the classification will be in sub-heading 59.06 despite the mention of water proofing as one of the processes in Chapter 52. This view gets support from the interpretative rules that if goods merit consideration for classification equally in more than one headings, such goods should be classified under the heading which occurs last in the numerical order. However, if there is no visible layer formation, then the said wax proofed/Tarpaulin cloth should be classified in Chapter 52 of the Central Excise Tariff as water-proofed cloth, provided the base fabrics are cotton fabrics. While determining whether the deposite on the surface is a visible layer or not, a `layer should be distinguished from mere presence of residues in uneven patches. 5. This may be brought to the notice of the field formations and trade interest." We also note that the Collector of Central Excise, Aurangabad in the order supra in regard to the classification of Tarpaulin has observed as under :- In this case the process employed for water-proofing as not disputed but .....

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..... t Tarpaulin Cloth, I find that the foregoing explanation stands good in this connection also. Heading No. 5906.00 covers textile fabrics otherwise impregnated, coated or covered (including fabrics covered partially or fully with the textile flocks or with preparation of containing textile flocks). Note No. 5 to Chapter 59 takes out from the ambit of Heading No. 5906, fabrics in which the impregnation, coating or covering cannot be seen with the naked eye. This makes it clear that for classifying a product under Heading 5906, there should be a visible formation of layer on the surface of the fabrics. From the sample of the product, I find that no such layer could be seen. Therefore, the impugned product viz. Tarpaulin cannot be classified under sub-heading 5906 and the appropriate classification is 5207. The allegation in the Notice with regard to classification of Tarpaulin cloth also does not sustain. 6. Taking all these facts into consideration and keeping in mind the pleas urged by the ld. SDR we are of view that the issue is contentious one and warranting critical scrutiny and indepth analysis of all the pieces of evidence vis-a-vis the wording of Chapter Note etc., which ot .....

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