Tariff classification of interlining coated fabrics fails under Chapter 59.03 when test reports and valid circular guidance do not support it.

Interlining coated fabrics were held not classifiable under Chapter 59.03 because the test reports and applicable tariff notes showed the goods were not fully embedded in plastic, not coated on both sides, did not have designs from discrete plastic coating, and were not impervious as required by the governing circular guidance. The de novo authorities were also found to have exceeded the earlier remand directions by relying on a classification basis that had ceased to be valid. The impugned classification and duty demand were set aside, with consequential relief.

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Issues: (i) Whether the impugned interlining coated fabrics were classifiable under Chapter 59.03 as coated fabrics or under Chapter 52 on the basis of the textile material; (ii) Whether the de novo authorities acted within the scope of the earlier Tribunal's remand directions and the applicable Board circulars while deciding classification.

Issue (i): Whether the impugned interlining coated fabrics were classifiable under Chapter 59.03 as coated fabrics or under Chapter 52 on the basis of the textile material.

Analysis: The classification had to be determined with reference to the tariff chapter notes and the contemporaneous circulars governing fusible interlining cloth. After deletion of Chapter Note 2(c), the earlier explanatory circulars and the exclusions in Chapter Note 2(a) remained relevant. The retest reports showed that the samples were not completely embedded in plastic, were not entirely coated on both sides, did not bear designs resulting from discrete plastic coating, and were not impervious as required by the earlier circular guidance. The goods therefore fell outside the scope of Chapter 59.03.

Conclusion: The classification under Chapter 59.03 was not sustainable, and the goods were not classifiable as coated fabrics under that heading.

Issue (ii): Whether the de novo authorities acted within the scope of the earlier Tribunal's remand directions and the applicable Board circulars while deciding classification.

Analysis: The earlier remand required retesting of the remnant samples and consideration of the specified circular. The de novo adjudication and the appellate order did not confine themselves to those directions and instead proceeded on reasoning that had already been displaced. The later circular relied upon to sustain Chapter 59.03 was also no longer available as a valid basis after it had been set aside. The de novo exercise thus travelled beyond the remand mandate and was legally infirm.

Conclusion: The de novo orders could not be sustained because they exceeded the scope of the remand directions and wrongly applied the classification basis.

Final Conclusion: The impugned classification and duty demand were set aside, and the appeal succeeded with consequential relief as per law.

Ratio Decidendi: For tariff classification, the governing chapter notes and valid circular guidance must be applied in the light of the actual test reports, and a de novo authority must strictly act within the limits of the remand directions; where the goods do not satisfy the exclusionary and imperviousness requirements, classification under Chapter 59.03 cannot be sustained.

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