Made-up textile bags qualify for DEPB benefit where ancillary materials do not alter their essential character.

Musical instrument bags made of polyester or cotton fabrics, even with ancillary materials such as velvet, foam, leather, plywood or satin cloth, were treated as made-up articles under Product Group 89 for DEPB purposes. The tariff notes on Section XI and Chapter 63 supported the view that textile products in finished form and ready for use, including bags under Heading 63.05, are made-ups. The absence of restrictive words such as "exclusively" or "only" in the DEPB entry was material, so the mixed composition did not disqualify the goods. The CBEC circular relied on by the Revenue was held inapplicable, and DEPB benefit was held admissible.

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Issues: Whether musical instrument bags made of polyester or cotton fabrics, containing other materials, were entitled to DEPB benefit as "made-ups" under Product Group 89.

Analysis: Product Group 89 covered made-ups made out of man-made filament yarn and processed cotton made-ups. The goods were admittedly exported as polyester or cotton bags and were accepted in the market as synthetic bags or cotton bags. Section Note 7 of Section XI and Chapter Note 1 of Chapter 63 of the Customs Tariff Act, 1975 showed that textile products produced in finished form and ready for use, including bags under Heading 63.05, are made-up articles. The absence of the words "exclusively" or "only" in the DEPB entry was material, and the presence of ancillary materials such as velvet, foam, leather, plywood, or satin cloth did not alter the essential character of the bags. The CBEC circular relied on by the Revenue was not applicable to the facts.

Conclusion: The bags were made-up articles of polyester or cotton textiles and qualified for DEPB benefit. The denial of benefit was unsustainable.

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