Specific tariff classification prevails over predominance test, while revenue neutrality cannot cure an incorrect exemption-based classification.

Chenille fabrics were held classifiable under Tariff Heading 5801 because the assessee's own records described the goods as chenille fabrics or made-ups, and chenille yarn was used as input. The predominance test for composite textiles was held inapplicable because Section Note 2(A) of Section XI does not override a tariff entry that specifically covers chenille fabrics. Revenue neutrality was rejected as no answer to an incorrect classification or an exemption claim contrary to the tariff entry. The department's classification was upheld, the exemption claim failed, and the appeals were dismissed.

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Issues: (i) Whether the goods manufactured were classifiable as chenille fabric under Tariff Heading 5801 or as unprocessed cotton fabric under Tariff Heading 5208. (ii) Whether the plea of revenue neutrality could justify the classification adopted by the assessee.

Issue (i): Whether the goods manufactured were classifiable as chenille fabric under Tariff Heading 5801 or as unprocessed cotton fabric under Tariff Heading 5208.

Analysis: The goods were described in the assessee's own documents as chenille fabrics or made-ups of chenille fabrics, and chenille yarn had been purchased and used as input. The argument that the fabric was a composite textile and had to be classified on the basis of the predominant material was rejected because Section Note 2(A) of Section XI applies only to goods classifiable in Chapters 50 to 55 or in Heading 58.09 or 59.02. Chenille fabrics are specifically covered under Tariff Heading 5801, so the predominance test was inapplicable.

Conclusion: The goods were correctly held to be classifiable as chenille fabric under Tariff Heading 5801 and not as unprocessed cotton fabric under Tariff Heading 5208.

Issue (ii): Whether the plea of revenue neutrality could justify the classification adopted by the assessee.

Analysis: Revenue neutrality was held to be no answer to an incorrect classification or to claiming the benefit of an exemption notification contrary to the tariff entry. The plea was therefore not accepted as a basis to disturb the demand.

Conclusion: The plea of revenue neutrality was rejected.

Final Conclusion: The classification adopted by the department was upheld, the exemption claim failed, and the appeals were dismissed.

Ratio Decidendi: Where a tariff entry specifically covers a product, a general rule of classification based on the predominant constituent cannot override it, and revenue neutrality does not validate an incorrect classification or an untenable exemption claim.

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