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TMI Blog2005 (1) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... al's order regarding classification of the goods, the parties Preferred appeals to the Supreme Court against the said order. These appeals have since been disposed of by the court as per judgment dated 5-5-2004 reported as Ugam Chand Bhandari v. CCE, Madras, [2004 (167) E.L.T. 491 (S.C.) = 2004 (62) RLT 240 (SC)]. Their lordships have upheld the classification of the assessees' tarpaulins under Heading 59.06. Para (8) of the judgment in Ugam Chand Bhandari (supra) is relevant and the same reads thus: "8. As stated earlier, finding recorded by the Tribunal as to the nature of the product is after examining relevant material with reference to relevant entries. The denial of cross-examination was due to the lapse of the appellant and cannot take advantage of the same in these proceedings. The Tribunal held that the fabric manufactured by the appellants is impregnated and, therefore, has to be considered as fabric impregnated with materials other than those mentioned under Tariff Headings 59.02 and 59.05. Such impregnation clearly indicated that under the scheme of the Central Excise Tariff the impregnated fabrics with a coating and which is visible to the naked eye on the material on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication of the goods under SH 5906.90 are against these orders: Order-in-Original Revenue's Appeal No. No. 10/2000, dt. 30-6-2000 E/734/2001 No. 6/2000, dt. 14-8-2000 E/974/2001, E/975/2001 Appeal No. E/1296/2000 of M/s. Rohini Mills (P) Ltd. for classification of Tarpaulin made-ups under SH 5207.00 is against Order-in-Original No. 12/2000, dt. 30-6-2000 passed by C.C.E, Chennai -II classifying the goods under SH 6301.00 and confirming demand of duty thereon for 1994-95. 3. We have also before us nine other appeals with stay applications filed by assessees. Five of these appeals are against classification of Tarpaulin made-ups under SH 63.06 (as claimed by the Revenue) accompanied by demands of duty and are listed below Impugned Order Appeal No. Appellant Order-in-Appeal No. 19/2000, dated 10-10- 2000 E/62/200 M/s. Bharat Textiles & Proofing industries Ltd. Order-in-Appeal Nos. 189-192/2001, dated 18-9-2001 E/1095/01 E / 1096/01 E/1097/01 E/1098/01 M/s. Rohini Mills (P) Ltd. M/s. F. Harley & Co. M/s. Tarpaulin General Traders M/s. Calcutta Canvas Co. Appeal No. E/51/2001 of M/s. Tarpaulin International is against Order-in- Original No. 24/2000, dt. 28-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e The tarpaulin so manufactured was cut to size and stitched to make what are called "tarpaulin made-ups". Some of the assessees fitted their tarpaulin made-ups with eyelets also. 7. According to the Revenue, the tarpaulin fabrics manufactured and cleared by the assessees during the material periods were classifiable under SH 5906.90. The assessees would classify the goods under SH 5207.00. The competing entries are as under: 52.07 5207.00 Cotton fabrics (excluding fabrics covered under Heading Nos. 52.09, 52.10 and 52.11), (a) woven on looms other than handlooms, and (b) subjected to the process of bleaching, mercerising, dyeing, printing, water-proofing, shrink- proofing, or gandie processing or any other process or any two or more of these processes without the aid of power or steam 59.06 Textile fabrics, otherwise impregnated, coated or covered (including fabrics covered partially or fully with textile flocks or with preparations containing textile flocks). -Fabrics covered partially fully with textile flocks or with preparation containing textile flocks: 5906.11 -- ------------- 5906.12 -- ------------ 5906.19-- ------------ 5906.90-- Other. 8. Note 5( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had occasion to consider the above circulars of the Board as also to consult technical dictionaries/literature on textile materials, in the context of classifying a similar product. The relevant findings of the Bench, which held that the tarpaulin fabric manufactured by the above party was only water-proofed cotton fabric classifiable under Headings, 52.06/52.07, are extracted below: "The Board further clarified that the classification of the goods may, therefore, be decided on the basis of facts and circumstances of each goods keeping in view the visibility criteria discussed in Board's aforesaid circular dated 11-4-91. We have also perused the definition of the term impregnated and water-proof in the Fairchild's Dictionary of Textiles. We note that in impregnated fabrics the interstices between the yarns are completely filled with an impregnating compound. Throughout the thickness of the material whereas water-proof fabrics are generally tightly woven and coated with rubber, plastic, linseed oil, cellulose esters etc. We have also seen the Glossary of Textile Term in the Handbook of Glossary of Textile Terms and the definition of impregnated Fabric and Water-proofing. On perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When the Chemical Examiner was asked to specify as to whether the sample was coated or impregnated, she replied that it was "coated/impregnated". In answer to a supplementary query, she said she had used the expression "coated/impregnated" in her test reports because she had to use such expression as per the Tariff. Significantly, the Chemical Examiner could not categorically state that the fabric had a coating of waxy material but in any case she deposed that there was no layer on the fabric surface. Later on, when requested to comment on other experts' opinion (gathered by the assessees) that the fabrics had no visible layer on surface; another Chemical Examiner (Smt. N. Padmasini) offered the following opinion to the Department in her letter dated 26-4-99: 'All the evidence produced (by) the appellants placed in the file agree to the fact that the fabrics under reference are water proofed, impregnated with preparation containing waxy material. All of them are of the view that "visible to the naked eye" is applicable only to fabrics laminated with resins/polymers and this criteria is not applicable to fabrics of the type in question (waxed fabrics). All the opinions state that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the tarpaulin fabrics had such layer formation on surface as could be seen with the naked eye. The Revenue's claim received a further jolt when the Director (Revenue Laboratories) [formerly designated "Chief Chemist"] CRCL, New Delhi, reported (after testing of samples of tarpaulin cloth from six of the assessees) vide letter No.41-Exc/98 dated 7-4-2000 as under: "In case of each of the above six samples interstices between the yarns are not completely filled and light passes through the interstices. Warp and weft yarns of the fabric in each of the six samples are visible with naked eves thus there is no formation of layer on each of the samples visible to the naked eye." (Emphasis added). Moreover, all other experts cited by the assessees certified that the tarpaulin fabrics did not have visible layer formation and this fact was acknowledged by the Chemical Examiner herself vide her letter dated 26-4-99. These expert opinions virtually stood corroborated with the above report of the Director (Revenue Laboratories) and the same were not contested by the Chemical Examiner when called upon to comment on them. The Department could not prove that the tarpaulin fabrics had "layer f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .L.T. 514, wherein tarpaulin cloth was classified under heading 52.06 based on a finding that there was no visible formation of layer on the surface of the fabric. In the case of Modi Enterprises v. CCE, Bhubaneshwar, 2001 (131) E.L.T. 76, water-proof fabrics manufactured by the assessee were classified under heading 52.07. The decision of the Tribunal was to the same effect in Kohinoor Tarpaulin Industries v. CCE & Cus., Pune, 2001 (131) E.L.T. 660. In the case of Ashish Enterprises v. CCE & Cus., Aurangabad, 2002 (145) E.L.T. 628, also water-proofed cotton fabric was held classifiable under heading 52.07. Again in Kalpataru Industries v. CCE, Mumbai, 2003 (156) E.L.T. 297, the Tribunal classified water-proofed cotton fabric under heading 52.07 as claimed 'by the assessee. In all these cases, the Revenue's claim under heading 59.06 was rejected. 12. Following the line of decisions on classification of similarly manufactured tarpaulin fabrics, we hold that the tarpaulin fabrics' manufactured by the assessees during the material periods are to be classified only under heading 52.07 of the CETA Schedule and not under heading 59.06 of the said Schedule. In the result, the Revenue's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is question was settled by the Andhra Pradesh High Court in TRC No. 215/90 [state of Andhra Pradesh v. Binny Ltd.] as per order dated 13-2-1992, wherein it was held that stitching of the edges of cotton canvas and fitment of eyelets thereto did not bring about any material change in the essential character of cotton canvas and, therefore, the commodity would continue to be covered by the expression "cotton fabrics" under Item No. 5 of the Fourth Schedule to the Andhra Pradesh General Sales Tax Act. It needs to be mentioned in this context that for the purpose of the said item No. 5, the APGST Act had adopted the definition of "cotton fabrics" given under Tariff Item 19 of the old Central Excise Tariff. We have already noted the parity between Item No. 19(I) (b) of the old Central Excise Tariff and SH 5207.00 (Heading 52.07) of the new Tariff. It would follow that the decision of the Andhra Pradesh High Court will govern the instant issue as to whether the conversion of tarpaulin fabric to made-ups would amount to "manufacture" for the purpose of levy of CE duty. No better judicial authority on the issue has been cited by the Revenue. Therefore, following the decision of the High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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