2000(03)LCX0058
IN THE CEGAT, COURT NO. IV, NEW DELHI
S/Shri G.R. Sharma, Member (T) and A.C.C. Unni, Member (J)
COMMISSIONER OF CENTRAL EXCISE, NEW DELHI
Final Order Nos. 96-97/2000-D, dated 21-3-2000 in Appeal Nos. E/82/99 & E/926/99-D
Cases Quoted
Saurashtra Chemicals v. Collector — 1985(08)LCX0017 Eq 1986 (023) ELT 0283 (Tribunal-LB) — Relied on ...... [Para 5]
Saurashtra Chemicals v. Collector — 1997(09)LCX0021 Eq 1997 (095) ELT 0455 (S.C.) — Relied on ................... [Para 6]
Advocated By : S/Shri M. Chandrashekharan, Sr. Advocate and R. Krishnan, Advocate for the Appellants.
Shri V.M. Udhoji, JDR, for the Respondent.
[Order per : G.R. Sharma, Member (T)]. - These two appeals are on the same issue. They were, therefore, heard together and are being disposed of by this common order. The issue is of classification of knitted cotton fabrics and other knitted fabrics containing elestomeric yarn.
2. The facts of the case in brief are that the appellants manufacture knitted fabrics of yarn and other knitted fabrics containing elestomeric yarn. The assessee claimed that the yarn was classifiable under sub-heading 6002.92 whereas the department had held that the yarn was classifiable under sub-heading 6002.30
3. Shri M. Chandrashekharan, ld Sr. Advocate along with Shri R. Krishnan, ld. Advocate appeared for the appellants who submitted that the test report relied upon in the SCN shows that the fabrics in dispute contain 90.7% of cotton and 9.3% of elestomeric yarn. He submitted that thus cotton predominated in the composition of the knitted fabrics. He, therefore submitted that the principle for classification of this fabric appeared under Note 2(A) of Section XI of the Tariff which inter alia lays down “Goods classifiable in Chapters 50-55 or in Heading Nos. 58.09 or 58.02 and of mixture of two or more textile materials are to be classified wholly of one textile material which is predominant by weight over any other single material.” He submitted that elestomeric yarn has been defined “Filament yarn, including monofilament of synthetic textile material, other than textured yarn, which does not break on being extended to 3 times its original length and which returns, after being extended to twice its original length, within a period of 5 minutes, to a length not greater than one and half time its original length.” He submitted that there is no dispute that the yarn used by them was elestomeric yarn. He referred to Note 2(A) to Section XI and submitted that this Note provides “Products of Chapters 56 to 63 containing 2 or more textile materials are to be regarded as consisting wholly of that textile material which would be selected under Note 2 above in the classification of product of Chapters 50 to 55 consisting of same textile material. He submitted that after reading the above note it becomes clear that for classification of the product under Chapters 56 to 63 predominance of textile material is the deciding factor. He submitted that admittedly their product falls under Chapter 60 and, therefore predominance of the textile material will be the deciding factor for determining classification of this product. He referred to the Interpretative Rule 5 of the rules for interpretation of Central Excise Tariff and submitted that this rule provides “For legal purposes, the classification of goods in the sub-heading of a heading shall be determined according to the terms of those sub-headings and any related sub-heading notes and, mutatis mutandis, to the above rules, on the understanding that the only sub-headings at the same level are comparable. For the purposes of this rule, relative chapter and section notes also apply unless the context otherwise requires”. Ld. Sr. Advocate submitted that if this interpretative rule is applied in the above context then the product of Chapters 56 to 63 shall be classifiable in terms of the chapter and section notes. He submitted that the Chapter Note 2(A) clearly provides that the deciding factor for classification for product classifiable under Chapters 56 to 65 where the product contains 2 or more textile materials then the textile material which predominates will be the deciding factor. He submitted that in terms of the above, their product shall qualify for classification under Chapter Sub-heading 6002.92. He, therefore prayed that the appeals may be allowed.
4. Shri V.M. Udhoji, ld. JDR, submits that a look at the Chapter Sub-heading 6002.30 will show that the knitted textile fabrics of a width not exceeding 30 cm containing elastomeric yarn or rubber thread shall qualify for classification under Sub-heading 6002.30. He submits that this is a specific tariff heading for textile fabrics containing elastomeric yarn and, therefore since it was a specific heading it shall prevail over the general heading. He submits that this is well settled position in law that the specific heading should prevail over the general heading. He submits that Sub-heading 6002.30 is a specific heading whereas Sub-heading 6002.92 is a general heading, therefore for the purpose of classification, specific heading namely, Sub-heading 6002.30 is the correct classification of the product in dispute. He, therefore submits that the appeals may be rejected.
5. Heard the rival submissions. We note that in the instant case the controversy is whether chapter notes and section notes could be preferred over the specific notes. We note that similar issue came up before the Larger Bench of this Tribunal in the case of Saurashtra Chemicals, 1986 (023) ELT 283. This Tribunal observed that section notes and chapter notes in the Customs Tariff are part of the general statutory tariff and are relevant for classification of goods under the Customs Tariff. Relevant headings in the tariff are to be interpreted and applied in the light of the section notes and chapter notes which are statutory and binding like the headings themselves. These section notes and chapter notes sometimes extend and sometime restrict the scope of certain headings. In another words, the scheme of the Customs Tariff Act is to determine the coverage of respective headings in the light of the section notes and chapter notes. In this sense, the section notes and chapter notes have an overriding force on the respective headings. Though this decision of the Tribunal is in respect of Customs Tariff, however, with the introduction of new tariff on the central excise side two tariffs are now similar and thus the decision in respect of applicability of chapter notes and section notes and their overriding force on the respective headings is equally applicable to Central Excise Tariff where there is no prohibition.
6. Examining the case before us in the light of the above findings of this Tribunal which are reported to be confirmed by the Apex Court and reported in 1997 (095) ELT 455. The Apex Court in its order held that “We have perused the judgment of the majority. We are of the view that the judgment of the majority does not suffer from any error which may call for interference, by this court under Article 136 of the Constitution. The appeals are, therefore, dismissed. No orders as to costs.” We note that the facts of the facts are similar to the present case of the appellants. Following the ratio of the above decision, we hold that the product in dispute shall be classifiable under Chapter 6002.92. In this view of the matter, two appeals are allowed.
Equivalent 2001 (131) ELT 434 (Tri. - Del.)
Equivalent 2000 (038) RLT 0710