S. KUMARS Vs. CCE INDORE

JUDGEMENT

(1.) This is an application for waiver of pre -deposit of duty amounting to Rs. 19,58,446/ - and penalty amounting to Rs.2 lakhs confirmed by the Commissioner (Appeal) under the impugned Order against M/s S. Kumars.

(2.) Shri V. Lakshmikumaran, Id. Advocate, submitted that the applicants, besides manufacturing Textiles Fabrics, also do job work; that they received knitted pile fabrics in grey form M/s Dhvani Terefebs Exports Pvt. Ltd; that they received grey fabrics in running length of 300mtrs which is being cut by them into convenient lengths according to the size of their machines and then they undertake the process of washing, dyeing and bleaching hydro extraction, tumble dyeing and drying; that before 23 -7 -96 both grey and processed fabrics was classified by the Department under Heading 60.01 of the Schedule to the Central Excise Tariff Act; that with the grant of exemption to goods falling under Heading 60.01, three show cause notices were received by them for classifying the processed fabrics under Heading 63.07 as "other made up textile articles;" that Assistant Commissioner demanded the duty and imposed penalty which has been confirmed by the Commissioner (Appeals). He, further, submitted that as the grey fabrics received by them from M/s Dhvani is being classified under Heading 60.01, the processed fabrics in the applicants' hands cannot be classified under Heading 63.01; that in any case the fabric manufactured by them does not meet the definition of 'mad up' as defined under Note 5(f) to Section XI; that according to Note 5(f) 'made up' means knitted or crocheted to shape, presented as separate items or in the form of a number of items in the length; that they are only undertaking the process of washing, dyeing and drying, bleaching etc, and no knitting to shapes is involved in the process undertaken by them and as such Note 5(f) does not apply to the products manufactured by the. He, further, mentioned that the Commissioner (Appeals), relying upon note 5 (b) to Section XI, has concluded that even though sewing is required to make the processed fabric into finished state, since the goods have the essential character of 'made up' by the application of Rule 2(a) of the Interpretative Rules, the impugned goods have to be calssifide under Heading 63.70; that note 5 (b) is not applicable as in order to make the processed fabric into made up articles, it requires sewing which is not done by them. He relied upon the decision in the case of Rajasthan Industries Ltd. Vs. CCE 1989(42) ELT (T), wherein it was held that a hollow tubular fabric cut into required length cannot be said to be cut into square or rectangles." But the fabrics are not articles in the finished state ready for use without sewing or other working. Reliance was also placed on the decision in the case of CCE Coimbatore Vs. Terrytex 1997(91) ELT 169(T), wherein it was held that in case sewing is required for making the goods ready for use, the same would stand precluded from the scope of made up articles as set out under Section Note 5(b) to Section XI. Finally the ld. Advocate submitted that it is settled legal position that where a particular expression has been defined in the tariff for the purpose of particular Heading or Chapter, an item which does not satisfy the definition, cannot be classified under Heading or Chapter, by any process of Interpretation or by the Application of any Interpretative Rules and reliance was placed on he decision in Netlon India Ltd Vs. CCE 2000(121) ELT 675 (T).

(3.) Opposing the prayer, Shri R.C.Sankla, Id. DR. submitted that the definition of made up article as given in Note 5(f) to Section XI of the Tariff applies to the fabric in question as the applicants were cutting the fabrics to desired length and accordingly the impugned goods have been rightly classified under sub -heading 6307.90; that the decision in the case of Terrytax is not applicable to the facts of the present matter as the issue involved is interpretation of note 5(f), whereas in Terrytax, the interpretation was based of Note 5(b) to Section XI. He emphasised that the fabrics received by the party though is in running length but it has narrow/small strip of unpiled knitting all along its length after a gap of pre -determined and specific length; that the is very aspect provides the identity as made up article to the impugned goods. Finally he submitted that it has been decided by Supreme Court in the case of Elson Machines Pvt. Ltd Vs. CCE 1988(38) ELT 571(SC) that there is no estopple against the statute and as such the Department can revise the classification list.