1991 (5) TMI 76 - CGOVT - Customs

Exported items by MADURA COATS LTD. not under Drawback Schedule 2502. Dominance /= exclusion. Impugned orders set aside.

The Government held that items exported by M/s. MADURA COATS LTD. were not covered under sub-serial No. 2502 of the Drawback Schedule, emphasizing that ... Drawback Issues:1. Interpretation of the term 'predominance in weight' in the context of drawback claims for cotton sewing thread.2. Whether cotton sewing thread made entirely of cotton fabric qualifies for drawback benefits under sub-serial No. 2502 of the Drawback Schedule.3. Application of the concept of predominance of weight in the Tariff for classification purposes.4. Determination of eligibility for drawback on export of thread under sub-serial No. 2502.5. Review of Order-in-Appeal No. M-Cus-3985 & 3986/88 by the Government.Analysis:The judgment revolves around the interpretation of the term 'predominance in weight' concerning drawback claims for cotton sewing thread. M/s. MADURA COATS LTD. filed claims of drawback on the export of cotton sewing thread under specific shipping bills. The dispute arose when the original authority rejected the claims, citing that the sewing thread was entirely made of cotton, while the relevant sub-serial No. 2502 covered thread where man-made fiber or cotton predominated in weight. However, the Appellate authority overturned the decision, stating that even goods with 100% cotton fibers are eligible for drawback benefits under the specified sub-serial.The respondents contended that the term 'predominance in weight' in the Customs and Central Excise Tariff is for classification purposes based on actual composition, and it does not necessarily exclude the complete absence of another fiber. They argued that the drawback on the export of thread is available under sub-serial No. 2502, irrespective of whether it is composed of man-made fiber, cotton thread, or a blend of both. The Government, after considering the arguments, emphasized that predominance should imply domination over another variety and cannot mean complete exclusion. They rejected the argument of a ratio of cent per cent: nil, stating it is illogical and an abstraction.Furthermore, the Government disagreed with the Collector of Customs (Appeals) concluding that thread entirely made of cotton fabric could be treated as thread where cotton predominated in weight. They clarified that if an item is not listed in the Drawback Schedule, it cannot be assumed to attract drawback benefits. The judgment highlighted the distinction between the terms 'wholly' and 'predominantly (by weight)' in the Drawback Schedule, indicating that these terms have distinct connotations, and each should be presumed to have separate coverage.In conclusion, the Government held that the items exported by M/s. MADURA COATS LTD. were not covered under sub-serial No. 2502 of the Drawback Schedule. As a result, the impugned orders in appeal were set aside, and the original orders were restored. Additionally, two more revision applications related to similar claims were rejected based on the findings of the review proposal, aligning with the decision taken in the main review case.