CARGO TARPAULIN INDUSTRIES Vs. COMMR. OF C. EX.

JUDGEMENT

(1.) The issues involved in this appeal, filed by M/s. Cargo Tarpaulin Industries, are whether Tarpaulin Cloth is classifiable under Heading No. 52.06 of the Schedule to the Central Excise Tariff Act as claimed by them or under Heading No. 59.06 as confirmed by the Collector in the impugned order and whether Tarpaulins were manufactured by them without the aid of power.

(2.) Shri B.L. Narasimhan, learned Advocate, submitted that the Appellants are engaged in the manufacture of wax treated cotton canvas cloth and tarpaulins stitched therefrom; that the wax is melted and mixed with other raw materials and then is shifted to the wax dipping machine; that the grey cloth is passed through the mix and the cloth picks up the wax; that the Collector has classified the tarpaulin cloth under Heading 59.06 holding that cloth is nothing but a coated/impregnated cloth which is evident from the process of manufacture undertaken by the Appellant and the impregnation/coating or covering is visible with the naked eye. The learned Advocate, further, submitted that Note 4 to Chapter 59 provides that Heading 59.06 does not apply to "fabrics in which the impregnation, coating or covering cannot be seen with the naked eye (usually Chapters 50 to 55, 58 or 60)"; that thus for a product to be classified under Heading 59.06 it is essential that the impregnation, coating or covering should be such that it can be seen with the naked eye; that the Chief Chemist on re -test has opined that the interstices between the yarns are not completely filled; light passes through the interstices and wrap and weft yarns of the fabrics are visible with naked eye; that thus it is apparent that there was no visible layer formation which is necessary to classify the fabrics under Heading 59.06; that the Central Board of Excise and Customs has clarified vide Circular No. 6/91 -CX. 1, dated 11 -4 -1991 that "For classifying a product as otherwise impregnated/coated fabrics falling under sub -heading 59.06, there should be a visible formation of layer on the surface of the fabric.."; that as there is no visible layer formation, the impugned product cannot be classified under Heading 59.06. He also mentioned that the Chief Chemist has given the test report dated 13 -9 -1993 in respect of three units namely Ducksole (India), Nandi Tarpaulin and the Appellants; that the Appellate Tribunal in the case of other assessees has held their product classifiable under Heading 52.06 - Ducksole (I) Ltd. v. C.C.E., Bangalore - 2000 (125) E.L.T. 830 (T). The Tribunal has held as under : -

(3.) The learned Advocate, further, mentioned that as regards the tarpaulin, the Collector has proceeded to confirm the demand on the entire quantity when only occasionally power was used for stitching; that at the very first day of investigation, the Appellants had clearly indicated that generally the tarpaulins were stitched without the aid of power; that as such the impugned order demanding duty on the entire quantity of tarpaulin is liable to be set aside. Finally he submitted that the benefit of small scale exemption would be available to them as their clearances had not exceeded the limit of value of clearances specified in the SSI exemption Notification; that for the same reason no penalty is imposable on them.