Shrink-proof fabric classification failed where no stenter was used; unsupported private records could not sustain the duty demand.

Cotton fabrics processed on a zero-zero machine without a stenter attachment were not treated as shrink-proof fabrics, so the exemption could not be denied on that ground. The Tribunal found no reliable evidence that the goods were marketed as shrink-proof fabric and held that the 1964 Board instructions could not, by themselves, sustain a duty demand after their withdrawal by Circular No. 38/38/94-CX.4 dated 27-05-1994. It further noted that departmental and SITRA test material showed the absence of the necessary shrink-proofing facility, and that private records or statements without corroboration were insufficient to uphold the demand. The duty confirmation was therefore set aside and the exemption was accepted.

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Issues: Whether cotton fabrics processed on a zero-zero machine without a stenter attachment could be treated as shrink-proof fabrics so as to deny the exemption, and whether the demand could be sustained on the basis of the 1964 Board instructions and private records.

Analysis: The processing activity was found not to have resulted in shrink-proof cotton fabric in the absence of a stenter machine, and the department did not adduce reliable evidence that the goods were marketed as shrink-proof fabric. The Tribunal held that the earlier Board instructions of 1964 could not be the sole basis for confirmation of duty, particularly after their withdrawal by Circular No. 38/38/94-CX.4 dated 27-05-1994. It also relied on the departmental and SITRA test material showing absence of the necessary shrink-proofing facility and on the settled view that private records and statements, without concrete supporting evidence, were insufficient to sustain the demand.

Conclusion: The demand was not sustainable, the exemption was available, and the order confirming duty was set aside in favour of the assessee.

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