Product composition and beneficial exemption entry: nylon/viscose fabrics could claim the lower effective rate

Nylon/viscose fabrics with zari were examined for tariff classification and exemption entitlement. On their actual composition, the goods were treated as falling under Heading 5409 rather than Heading 5508, because the presence of viscose did not make them staple-fibre fabric. As two effective rates were available under the exemption notifications, the assessee was entitled to claim the more beneficial rate for the goods. The department's contrary tariff assumption could not justify denial of that benefit, and clearance at the lower effective rate was permitted without filing a fresh classification list.

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Issues: Whether the fabrics manufactured by the appellant were classifiable under Heading 5409 rather than Heading 5508, and whether the appellant was entitled to clear the goods at the more beneficial effective rate under the exemption notifications without filing a fresh classification list or paying differential duty.

Analysis: The dispute turned on the composition of the fabrics and the structure of the exemption notifications in force. The goods were nylon/viscose fabrics with zari, and the notification entries treated fabrics of nylon filament yarn differently from fabrics of cellulosic origin. On the material before the Tribunal, the product could not be treated as fabric made of staple fibres merely because one component was viscose. The authorities had proceeded on the assumption that the goods were classifiable under Heading 5508, but the product description and tariff scheme indicated that Heading 5409 was the appropriate entry if the goods were examined on their actual composition. Where two effective rates were simultaneously available under the exemption notifications, the assessee was entitled to avail the more beneficial rate applicable to the goods.

Conclusion: The goods were not liable to be assessed on the footing adopted by the lower authorities, and the appellant was entitled to clear the fabrics at the lower effective rate without a fresh classification list.

Final Conclusion: The impugned demand could not be sustained, and the appeals succeeded.

Ratio Decidendi: When the product composition places the goods within the scope of a more beneficial applicable exemption entry, the assessee may choose that entry and cannot be denied the benefit on an erroneous tariff assumption by the department.

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