Classification of knitted pile fabrics under Heading 60.01 supports exemption where the chapter note retains them within Chapter 60.

Knitted or crocheted pile fabrics were treated as classifiable under Heading 60.01 of the Central Excise Tariff Act, 1985 because Chapter Note 1(c) to Chapter 60 expressly retained knitted, crocheted and chenile pile fabrics within that chapter. On that basis, the goods were classified as nylon fabrics under sub-heading 6001.12 as claimed, and exemption under Notification No. 109/86-C.E. was available. A contrary reading of the chapter note was rejected, and the exemption could not be denied once the goods fell within the notified tariff coverage.

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Issues: Whether knitted/crocheted pile fabrics manufactured by the respondents were classifiable under Heading 60.01 of the Central Excise Tariff Act, 1985 and entitled to exemption under Notification No. 109/86-C.E. dated 27th February, 1986.

Analysis: The exemption notification covered woven pile fabrics, chenile fabrics, tufted textile fabrics, and knitted or crocheted fabrics falling under Heading 58.01 or 60.01 of the Schedule to the Central Excise Tariff Act, 1985. The goods were found to be printed/crochet pile fabrics. Although Chapter Note 1(c) of Chapter 60 was relied upon to deny coverage, the note itself preserved knitted/crocheted and chenile pile fabrics within Chapter 60. Since the goods were admittedly pile fabrics, they fell under Heading 60.01, and as nylon fabrics they were classifiable under sub-heading 6001.12 as claimed.

Conclusion: The goods were eligible for classification under Heading 60.01 and the exemption under Notification No. 109/86-C.E. was admissible; the appeals failed.

Final Conclusion: The impugned order granting exemption to the respondents was upheld and the revenue appeals were rejected.

Ratio Decidendi: Where a tariff chapter note expressly retains knitted or crocheted pile fabrics within the chapter, such goods are to be classified accordingly and, if covered by the exemption notification, the exemption cannot be denied on a contrary reading of the note.

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