2004 (5) TMI 72 - SC - Central Excise

Supreme Court upholds classification of bleached sheeting under Central Excise Tariff Act

The Supreme Court upheld the classification of heavily sized bleached sheeting under Heading 52.06 of the Central Excise Tariff Act, rejecting the ... Whether bleached sheeting which is heavily sized and manufactured by each of the respondents falls under Heading 52.06 of the Central Excise Tariff Act, 1985 or under Heading 59.01? Held that:- The Tribunal held that the Board by their instructions issued on 2-9-1988 had clarified that for classifying such products under Heading 59.03, the textile fabrics should have a continuous and adherent films or layer on one side of the fabric surface and the fabric should be impervious and should satisfy the conditions prescribed in Note 2 of Chapter 59. They also adverted to letter issued by the Ministry of Finance, Department of Revenue dated 7-12-1989 wherein it had been confirmed that bleached and sized cotton fabrics manufactured by them merit classification under Chapter 52 as these fabrics were neither coated nor impregnated but only sized with starch. When the several ingredients have to be satisfied, even if one ingredient is not satisfied, namely, that the stiffness has to be of permanent and durable nature, we do not think that the view taken by the Tribunal calls for any interference on our hands. In addition, we may notice that in none of the cases presently involved, we have any heavily sized fabric. Therefore, that aspect need not detain us. Affirm the view taken by the Tribunal and dismiss these appeals. Issues: Classification of bleached sheeting under Central Excise Tariff Act - Heading 52.06 vs. Heading 59.01Detailed Analysis:1. The batch of cases before the Supreme Court involved the classification of heavily sized bleached sheeting by the respondents under Heading 52.06 or Heading 59.01 of the Central Excise Tariff Act, 1985.2. The respondents, engaged in manufacturing cotton fabrics stiffened with starch gum and inorganic fillers, initially classified the product under Heading 52.06. However, the Department later contended that it should be classified under Heading 59.01, leading to a demand for differential duty.3. The Assistant Commissioner ruled in favor of the respondents, classifying the fabrics under Heading 52.06. The matter was appealed to the Collector (Appeals) who upheld the demand under Heading 59.01. The case was then brought before CEGAT, which sided with the respondents, stating that the fabrics did not have permanent stiffness akin to 'Buckram' and should be classified under Heading 52.06.4. Reference was made to a previous case where fabrics stiffened with starch gum and fillers were classified under Heading 52.06. The Tribunal emphasized the need for fabrics to have continuous and adherent films for classification under Heading 59.01, which was not present in the current case.5. The Tribunal analyzed various definitions and expert opinions to determine the nature of stiffened textiles, emphasizing the requirement of permanent stiffness for classification under Heading 59.01. The Tribunal rejected the Revenue's contentions and upheld the classification under Heading 52.06.6. The Tribunal's decision was challenged on the grounds of not considering the heavy sizing of the fabric. However, the Court affirmed the Tribunal's ruling, stating that the lack of permanent stiffness was crucial for classification under Heading 59.01, and since none of the cases involved heavily sized fabric, the aspect was not significant.7. Ultimately, the Court dismissed the appeals, agreeing with the Tribunal's classification of the products under Heading 52.06 and rejecting the need for remand based on the heavy sizing aspect.This detailed analysis highlights the classification dispute regarding bleached sheeting under the Central Excise Tariff Act, emphasizing the criteria of permanent stiffness and heavy sizing for classification under the respective headings. The judgment provides a comprehensive examination of the issue, considering expert opinions, previous cases, and statutory provisions to arrive at a conclusive decision.