Embroidered fabric classification cannot shift to fibre-based chapters absent express tariff language; demand failed on a new basis.

Embroidery on fabric classified under Heading 58.05 was held not to justify reclassification under Chapters 52 to 55 merely because processing had been undertaken. Note 8 to Chapter 58 treats the specified processes as manufacture, but it does not remove embroidered fabric from Heading 58.05. Note 2A to Section XI was found inapplicable because it does not refer to Heading 58.05, so fibre predominance could not be used to shift classification. A demand based on that new classification could not be sustained when the notice proceeded on a different basis.

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Issues: Whether embroidered fabric classifiable under Heading 58.05 could be reclassified, on the basis of the processing undertaken, under Chapters 52 to 55 according to the predominance of fibre, and whether consequential duty could be demanded on that basis.

Analysis: Note 8 to Chapter 58 treats the specified processes on fabrics of that Chapter as amounting to manufacture, but does not exclude embroidered fabric from Heading 58.05 merely because such processing has been undertaken. Note 2A to Section XI was held inapplicable because it does not refer to Heading 58.05, and therefore does not justify classification of embroidered fabric under Chapters 52 to 55 by reference to fibre predominance. The notice could not be sustained on a new basis different from the one on which it proceeded.

Conclusion: The reclassification of the embroidered fabric under Chapters 52 to 55 was not justified, and the demand based on that classification could not survive; the appeal succeeded.

Final Conclusion: The assessee was held entitled to relief and the impugned order confirming the demand was set aside.

Ratio Decidendi: Processing of embroidered fabric under Chapter 58 does not, by itself, warrant reclassification under Chapters 52 to 55 unless the tariff provision expressly so provides; a demand cannot be upheld on a basis not set out in the notice.

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