2005 (9) TMI 15 - AT - Central Excise

Tribunal Rules Carpets as 'Jute Carpets,' Rejecting Revenue's 'Polypropylene' Claim Due to Jute Predominance.

The Tribunal concluded that the carpets manufactured by the appellants should be classified under Chapter sub-heading No. 5703.20 as 'Jute carpets,' ... Classification of the Carpets manufactured by the appellants - to be classified under Chapter sub-heading No. 5703.20 or under Chapter sub-heading No. 5703.90? - whether the Hessian cloth has to be separated for the purposes of the predominance test or not? - HELD THAT:- The Sub heading notes as reproduced above specifically indicates the situations when to include the base fabric and when not to include the base fabrics for the predominance test. Since Section Note to Section XI clearly laid down [(ii) of 3 on the last page] when to exclude and when to include the base fabric while determining the predominance test, it would not be permissible to exclude base fabric (Hessian cloth) in the appellants case, while determining predominance. Hence the predominance, test ' appellant's products has to be done taking the product manufactured by the appellants as a whole and not separating the layers and then applying the predominance test. We would also note that sub-heading Note 2B(i) would apply only if the product is made up of textile materials and a non- textile material. The revenue's reliance on a single dealer's statement indicating that the appellant's jute carpet are known in the market as 'Synthetic Carpet' will be of no consequence as the said statement is unsubstantiated by further evidence in any form and contrary to the description of the goods in sales documents. Further, it has been the intention and practices of the Government that products manufactured partly out of jute also has to be encouraged through exercise exemptions. This is clear from the fact that the Notification No. 50/90 as amended by notification No. 93/94 treats carpets containing 35% of jute also as 'jute carpets' eligible for the exemption. The said notification does not specify that only material at the exposed surface should be taken into account for determining the percentage of jute in the carpet. Nor is such a determination practicable. Thus, the Carpets manufactured by the appellants would be appropriately classified under Chapter sub-heading No. 5703.20 as carpet 'of jute' and not as 'other' carpet under 5703.90 - appeal allowed. Issues:Classification of Carpets - Chapter sub-heading No. 5703.20 vs. 5703.90Analysis:The dispute revolves around the classification of Carpets manufactured by the appellants, with the appellants claiming it should be classified as 'Jute carpets' under Chapter sub-heading No. 5703.20, while the Revenue argues for classification under Chapter sub-heading No. 5703.90 as 'Polypropylene carpets.' The appellants base their argument on the manufacturing process involving jute and Polypropylene fibers needle punched into Hessian cloth, emphasizing the commercial identity as 'jute carpets' since 1988. They rely on Section notes 2A and sub-heading Section notes 2A and 2B of the CETA, 1985 for classification based on the predominance test. Additionally, they cite exemption notifications supporting the classification of composite items containing jute as jute products. On the other hand, the Revenue contends that the exposed surface of the carpets being Polypropylene makes them 'Polypropylene carpets' commercially, supported by technical literature and the application of Chapter Note No. 1 of Chapter 57 for sub-heading classification. They argue that even under the predominance test, the presence of Polypropylene on the exposed surface leads to classification under 5703.90.The Tribunal delves into the relevant Chapter sub-headings, noting that the classification depends on the textile material of the carpet. Chapter Note No. 1 defines 'carpet and other textile floor coverings' based on the exposed surface's textile material, applicable for sub-heading classification. The Tribunal analyzes the manufacturing process, emphasizing the continuous creation of a single commodity - the carpet, rather than distinct layers. Referring to Section notes and sub-heading notes of the CETA 1985, the Tribunal highlights the predominance test for multi-textile material products, considering the weight predominance of jute in the appellants' carpets. They assert that the base fabric, Hessian cloth, should not be separated for the predominance test as specified in the sub-heading notes. Technical literature and market nomenclature are deemed inconclusive, with sales documents indicating the products as 'Floor Coverings of Jute.' The Tribunal upholds the appellants' classification under Chapter sub-heading No. 5703.20 as 'Jute carpets,' emphasizing the government's historical encouragement of jute-containing products through exemptions, supporting the classification decision.In conclusion, the Tribunal allows the appeals, classifying the Carpets manufactured by the appellants under Chapter sub-heading No. 5703.20 as 'Jute carpets,' rejecting the Revenue's classification under 5703.90 as 'Polypropylene carpets.'