9911796707
TMI Blog1998 (9) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... yarn prior to the Budget of 1995 and after the Budget of 1995 as to whether the same is classifiable under Heading 56.06 and whether exemption under Notification 26/94-C.E., dated 1-3-1994 was applicable to the said yarn during the relevant period. The manufacturing process of the covered spandex yarn is as under :- The manufacturing process for a core spun yarn is in every way similar to that of an ordinary ring spun yarn with a slight change in the ring spinning. In ring spinning frame, a modified creel is attached along with the existing roving bobbin creel in order to accommodate the lycra (spandex) filament spools. The modified creel consists of two rolls of 2" diameter which is driven from the bottom roll by means of sprockets and chains. The lycra filament after having drafted to the required amount is passed over `V grooved roll position just above the front top roll so that it goes just behind the front top roll into the nip. Roving is as usual fed at the back of the drafting system. The positioning of `V groove roll is also such that the Lycra filament when it comes out of the front roll nip is at the left side of the drafted roving. Thus both the drafted roving a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sified by the lower authority under Heading 56.06 as gimped yarn on the ground that the words other special yarn was omitted from Heading 56.06 and now the special yarns were only those which were covered by the Headings 56.04, 56.05 and 56.06. As per HSN the single yarn is staple fibre held together by twist of one filament or two or more filaments of Heading 54.02 held together with or without twist. In the instant case, the yarn is not composed of staple fibre but it has a core made of multifilament yarn (spandex) , which is covered by cotton staple fibre and hence it cannot be considered as single yarn. Further the goods are not multiple (folded) or cabled yarn. As only single or multiple (folded) yarns are covered under Heading 52.05, the question of classifying of this core spun yarn under the above heading is ruled out. The assessee have contended that the core spun yarn have to be classified under Heading 52.05 in terms of Note 2(A) of Section XI. Since, Core Spun Yarn is not classifiable under Heading 52.05, the provisions of Section 2(A) to Section XI are not applicable in this case. 4. After the amendment made in Budget of 1995, Heading No. 56.06 has been fully align ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56.06 covers gimped yarn, i.e., yarn having hard core . In the instant case also core spun yarn has a core of spandex yarn around which the cotton fibre is wound. In both gimped yarn and cores spun yarn, the core does not undergo a twisting and hence core spun yarn is very similar to gimped yarn and therefore, the lower authority classified the said yarn under Sub-Heading 5606.00 in terms of Rule 4 of the Rules for Interpretation of the Schedule to the Central Excise Tariff Act, 1985. 5. In the grounds of appeal the appellants submitted that the lower authority had erred in holding that covered spandex yarn was not spandex yarn but only core spun yarn. He had tried to make a distinction where none existed between the two types of yarn. Covered spandex yarn was also commercially known as core spun yarn. In the write-up furnished along with the very first classification list filed in 1992, the covered spandex yarn was described as both covered spandex yarn and core spun yarn. The lower authority had failed to note that the core was admittedly spandex and the core was covered by cotton fibre and hence the covered spandex yarn was nothing but a covered spandex yarn and hence exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of personal hearing. The question relates to the classification of the covered spandex yarn. From the manufacturing process as mentioned in para 2 supra it is clear that the appellants are importing lycra spandex yarn and there is no dispute that spandex yarn is used as a core in the said covered spandex yarn and for covering the said yarn the appellants are using cotton rovings. Therefore, the main two constituents of the said covered spandex yarn are 12% lycra spandex yarn and 88% cotton fibre. The question now arises whether the yarn manufactured by the appellants is covered spandex yarn or is a core spun yarn as has been held by the lower authority. The lower authority has held that the covered spandex yarn and the core spun yarn are two different products and he has classified the said yarns as core spun yarn only by relying upon the extracts relating to the covered [spandex] yarns and core spun yarns from the book titled Fibre to Fabric written by Corbman. He has come to the conclusion that the covering material is yarn in the case of covered spandex yarn and fibre in respect of core spun yarn. In the case of covered [spandex] yarn, the amount of str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1995, the new Tariff Heading reads as under : 56.06 : gimped yarn, and strip and the like of Heading No. 54.04 or 54.05, gimped (other than those of Heading No. 56.05 and gimped horse hair yarn); chenille yarn (including flock chenille yarn); loop wale yarn. The lower authority has classified the said covered spandex yarn as most akin to gimped yarn falling under Heading 56.06. The lower authority relied upon HSN notes below Heading 56.06 and came to the conclusion that the core spun yarn did not undergo twisting and that the said yarn was neither a single yarn nor multiple (folded) yarn classifiable under Chapter 52. 10. The appellants have submitted that in the case of covered spandex yarn manufactured by them, the core also got twisted and therefore, it was not similar to gimped yarn as had been held by the lower authority. During the course of personal hearing the appellant produced the sample of covered spandex yarn. The same was de-twisted to reveal that the core was also twisted along with the cotton roving. I have seen the sample of covered spandex yarn and on de-twisting the yarn, the core was also found twisted. From the HSN notes as mentioned in para 4 supra, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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