Parent fabric value governs slab classification, but assessable duty still applies to the fents and rags themselves.

Under Notification No. 136/77, the slab classification for fents and rags was determined by reference to the value of the parent cotton fabrics from which they arose, because the notification expressly used that reference for placing the goods in the relevant category. That reference did not permit substitution of the value of the fents and rags themselves, and no ambiguity justified reading the notification otherwise. For duty assessment, however, the assessable value remained the value of the fents and rags under section 4; the parent fabric value could not become the duty basis and operated only for slab identification.

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Issues: (i) Whether, under Notification No. 136/77 as amended, the slab rate for fents and rags was to be determined by reference to the value of the parent cotton fabrics or the value of the fents and rags themselves; (ii) whether the value of the parent cotton fabrics could form the basis of valuation of the fents and rags for duty purposes.

Issue (i): Whether, under Notification No. 136/77 as amended, the slab rate for fents and rags was to be determined by reference to the value of the parent cotton fabrics or the value of the fents and rags themselves.

Analysis: The notification was read on its plain terms. The description in column (2) classified fents and rags by reference to the value of the cotton fabrics from which they arose, and that value was relevant only for placing the goods in one of the specified categories. The contention that the notification should be read as referring to the value of the fents and rags themselves would require substitution of words in the notification, which was impermissible. No ambiguity was found in the wording, so the rule of resolving ambiguity in favour of the assessee did not apply.

Conclusion: The slab classification under the notification was to be determined by reference to the value of the parent cotton fabrics, not by the price of the fents and rags themselves.

Issue (ii): Whether the value of the parent cotton fabrics could form the basis of valuation of the fents and rags for duty purposes.

Analysis: The duty on fents and rags had to be assessed on the value of the fents and rags under section 4, and the rate in column (3) was then to be applied to that value. The value of the parent cotton fabrics was relevant only for identifying the applicable slab under column (2) and could not itself become the assessable value of the fents and rags.

Conclusion: The value of the parent cotton fabrics could not form the basis of valuation of the fents and rags for duty assessment.

Final Conclusion: The appeals were disposed of by holding that the classification under the notification depended on the value of the parent fabrics, while the assessable value for duty remained the value of the fents and rags under section 4.

Ratio Decidendi: Where an exemption notification classifies goods by reference to the value of the parent material, that reference governs classification alone and does not displace the statutory assessable value of the excisable goods themselves.

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