Benefit of doubt in yarn classification dispute where conflicting test reports could not disprove exemption eligibility.

Imported fabrics were disputed as to whether they were textured polyester filament yarn under Heading 5407 52 90, which would disqualify exemption under Notification No. 36/2003-Cus. The article stresses that the matter depended on the reliability of three laboratory reports, with two supporting the assessee and one supporting the Department. The HSN Explanatory Notes were treated as identifying only the distinguishing characteristics of textured and non-textured yarn, not prescribing a mandatory testing method. Because the evidence remained equivocal and the second revised report was viewed cautiously, the benefit of doubt was extended to the assessee and the classification adopted by the Commissioner was not sustained.

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Issues: Whether the imported fabrics were classifiable as textured polyester filament yarn under Heading 5407 52 90 so as to deny the benefit of Notification No. 36/2003-Cus., or whether the conflicting test reports required the benefit of doubt to be extended to the assessee.

Analysis: The dispute turned on the reliability of three laboratory reports, two of which supported the assessee and one of which supported the Department. The Explanatory Notes to the HSN were found to indicate only the distinguishing characteristics of textured and non-textured yarn and not any mandatory testing methodology. The second report of the Textile Committee was viewed with caution because it arose after suo motu retesting, the reasons for sending samples to multiple laboratories were unexplained, and the credibility of the revised opinion was weakened by the circumstances in which it was issued. The test was treated as subjective, and where the evidence remained equivocal, the assessee was entitled to the benefit of doubt.

Conclusion: The goods were not proved to be textured yarn for denying exemption, and the classification adopted by the Commissioner could not be sustained. The appeal succeeded with consequential relief.

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