9911796707
TMI Blog1996 (7) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... osed a penalty of Rs. 50,000/- under Rule 173Q of the Central Excise Rules, 1944. 2. The facts of the case leading to adjudication are that the appellants are engaged in the manufacture of excisable goods viz. various types of textiles. Acting upon intelligence, the Central Excise Officers paid a surprise visit to the factory premises of the assessee on 20-12-1989. While taking a round of the Mill No. 2 of the assessee, the Central Excise officers observed that at the door of Bin No. 6, "NEPS AND HARD WASTE" was painted. Inside the Bin No. 6, some bags were found lying in which regular sized small balls of man-made fibres were packed. On enquiry Shri G.C. Jain, Commercial Manager of the assessee gave an evasive reply, denying that the stock in question was of mill neps and stated that it was carding waste. The mill neps were found in 55 bags. All the bags were got weighed in the presence of Shri G.C. Jain. The net weight of the mill neps worked out to 627.7 kgs. Out of the same, 11 samples of 20 gms. each were drawn for chemical analysis, in the presence of Shri G.C. Jain, and were affixed with the Seal No. 122 of the Superintendent of Central Excise, Ajmer. The remaining qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assified under sub-heading No. 5601.00, the tariff does not define "Mill Neps"; (ii) they do not have the machinery to produce `mill neps' capable of being sold in the market. The so-called neps used by them are made on their carding machine by making some adjustment in guage and speed. Thus, mill neps are made by rolling between two discs; (iii) the so-called `Neps' produced by them are neither regular sized balls, nor produced by rolling between two discs; (iv) the duty on yarn in which neps were mixed and cleared under the sub-heading 5506.21 was correctly paid because in this case it cannot be said that the yarn contained any "other textile material" except the permissible fibres, because neps were nothing but viscose or polyester fibre as the case may be. Hence there is no case of short levy as alleged in the show cause notice; (v) they had denied the allegation of wilful suppression of the facts of blending of mill neps in the classification list filed by them and the GP issued by them. They had stated that since the yarns contained only polyester staple fibre and artificial staple fibre. It is stated that as per Chapter Notes of the Tariff and HSN "neps" cannot be treate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sold in the market, as they were themselves using the same. Therefore it satisfies the test of marketability. He has also held that the goods are rightly classifiable under sub-heading 5606.29 for the following reasons :- (1) The viscose fibres' predominance; (2) The yarn is containing artificial staple fibre in the form of viscose fibre, or neps of the same fibre and polyester fibre. 7. He has held that the neps and staple fibres are two entirely different commodities, or textile materials. Nobody will buy in the market neps in lieu of viscose staple fibre. Neps may be wholly composed of viscose staple fibres but are distinctly different from the viscose staple fibre. Therefore, sub-heading 5506.21 clearly lays down that yarn of artificial staple fibre containing synthetic staple fibre should not contain any other textile material. He has held that in Heading 5506.21 yarn made from artificial staple fibre and synthetic staple fibre, but not containing any other textile material are covered. The word "textile material" has not been defined in the Tariff. The word "textile" has been used as an adjective qualifying the word `material'. He has referred to Chamber's 20th C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned DR for the Revenue. 10. The Learned Advocate submitted that the mill neps are also viscose and hence it does not go sub-heading 5506.21 and hence not included in sub-heading 5506.29. The material should be of any textile fibre. It is his contention that the mill neps are artificial staple fibre hence the item would not be covered under sub-heading 5506.21 unless there are more than one type of polyester fibre. It is his contention that in the present case neps are also artificial staple fibre hence its presence by itself will not be considered to take it out of sub-heading 5506.21. The Collector had classified the same under sub-heading 5506.29 which according to the Learned Advocate is not correct. He submitted that the allegation that the item had not been disclosed to the department is not correct as the register which has been duly checked and had been examined by the department officials. He submitted that the assessee had a bona fide belief that the items were classifiable under sub-heading 5506.21 and that the same is not excisable. He submitted that the show cause notice had been issued on the basis of the information culled out from the record which were scruti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meter)". The question that arises for consideration is as to whether this mill nep which is admittedly an artificial staple fibre on being mixed with polyester and artificial staple fibre would go out of the Tariff sub-heading 5206.21 which reads :- "Containing artificial staple fibre and polyester staple fibre (not containing any other textile material), and in which the proportion of polyester staple fibre is more than 40% by weight of the total fibre content." 16. It is the contention of the Revenue that by mixing this mill nep along with other two items artificial and Polyester staple fibre, the item which comes out in the form in which it is removed from the factory would not be covered by sub-heading 5206.21 as `mill nep' is a textile material and it is excluded from the said sub-heading. In our opinion, mill nep which is in the nature of a small knot-like aggregate of tightly entangled fibres, usually not larger than a common pin head (about 2 mm in diameter) is not a textile material. The reason being a textile material as defined in "Fairchild's Dictionary of Textiles" at page 613 is "an inclusive term for fibres, yarns, fabrics, and products which keep relatively t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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