Notification benefit for coated fabrics upheld despite base fabric classification under Chapter 60

Coated fabrics classifiable under Tariff sub-heading 5903.19 were held to qualify for Notification No. 63/87-C.E. even though the base fabrics used in manufacture were classified under Chapter 60. The applicable principle, drawn from the Larger Bench decision in Entremonde Polyecoaters Ltd., was that where the finished product falls under 5903.19 and the base fabric remains cotton, duty is determined by the duty on the base fabric under Chapter 52 together with the notification rate, irrespective of the classification of the base fabrics used. On that binding view, denial of the notification benefit was not sustainable and the impugned order was set aside.

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Issues: Whether the appellants were entitled to the benefit of Notification No. 63/87-C.E. for coated fabrics falling under Tariff sub-heading 5903.19, notwithstanding that the base fabrics used in manufacture were classified under Chapter 60.

Analysis: The issue was covered by the Larger Bench decision in Entremonde Polyecoaters Ltd., which held that where the finished product falls under sub-heading 5903.19 and the base fabric remains cotton, the duty payable is the duty on the base fabrics under Chapter 52 together with the rate prescribed by Notification No. 63/87-C.E., regardless of the classification of the base fabrics used in manufacture. Applying that binding view, the denial of the notification benefit could not be sustained.

Conclusion: The appellants were entitled to the benefit of Notification No. 63/87-C.E., and the impugned order was set aside.

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