Terry towels with dividing thread classified as made-up textile articles, making them eligible for SSI exemption.

Terry towels manufactured in running length with a dividing thread, requiring only cutting for separation, are treated as made-up textile articles under Heading 6302.00 and not as terry towelling fabric under Heading 5802.22. On that classification, the goods qualify for SSI exemption under the relevant notifications. The departmental view was found inconsistent with earlier Tribunal rulings, and the challenge to the classification and exemption claim fails.

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Issues: Whether terry towels manufactured in running length with a dividing thread are classifiable under Heading 6302.00 or under Heading 5802.22, and whether they are eligible for SSI exemption under the relevant notifications.

Analysis: The goods were found to have a dividing thread and to require only cutting for separation into individual towels. On that basis, they fall within the category of made up textile articles under Heading 6302.00 and not as terry towelling fabric under Heading 5802.22. The exemption question followed the classification, and once the goods were held classifiable under Heading 6302.00, the benefit of the SSI notifications was available. The departmental view was held to be inconsistent with the settled position reflected in the Tribunal's earlier rulings.

Conclusion: The classification under Heading 6302.00 is correct, and the goods are eligible for SSI exemption; the Revenue's challenge fails.

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