Cotton-based exemption under excise notification denied where finished goods contained other textile fibres, sustaining demand and penalty.

Concessional duty under Notification No. 29/2004-C.E., as amended, was available only to Chapter 56 goods made of cotton and not containing any other textile material. Chemical test reports showed substantial fibres such as acrylic, polyester, wool, nylon and viscose along with cotton, so the goods were not made solely of cotton. A cited classification precedent on mixed textile materials was held inapplicable because the dispute concerned eligibility to an exemption notification. The assessee was therefore not entitled to the concessional exemption, and the demand and penalty were sustained.

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Issues: Whether the assessee was entitled to concessional duty under Notification No. 29/2004-C.E., as amended by Notification No. 7/2012, for goods falling under Chapter 56 of the Central Excise Tariff Act, 1985, when the finished goods contained fibres other than cotton.

Analysis: The notification granted concessional rate only to goods of Chapter 56 made of cotton and not containing any other textile material. Chemical test reports of the finished goods and raw material showed substantial presence of fibres such as acrylic, polyester, wool, nylon and viscose along with cotton. The presence of these additional textile materials meant that the goods were not made solely of cotton. The cited precedent on classification of mixed textile materials did not govern the present dispute, which turned on eligibility to an exemption notification.

Conclusion: The assessee was not entitled to the concessional exemption under the notification, and the demand and penalty were sustained.

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