Blended spun yarn classification turns on whether the finished yarn contains non-cellulosic man-made fibres.

For classification of blended spun yarn under the erstwhile Central Excise tariff, the decisive test was whether the finished yarn contained man-made fibres of non-cellulosic origin. Polyester fibre waste was first opened, converted into fibre, and then blended with cellulosic and cotton fibres before spinning, so it was treated according to its role in the finished yarn rather than by a formal distinction between waste and fibre. Applying the plain language of the entry and the scheme of the tariff, the yarn was held classifiable under Item 18-III(ii) and not Item 18-III(i), with the classification accepted in favour of Revenue.

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Issues: Whether cellulosic spun yarn made from polyester fibre waste of non-cellulosic origin, blended with cellulosic and cotton fibres, was classifiable under Item 18-III(i) or Item 18-III(ii) of the erstwhile First Schedule to the Central Excises and Salt Act, 1944.

Analysis: The relevant tariff entry turned on whether the spun yarn "contained" man-made fibres of non-cellulosic origin. The yarn was admittedly a blended spun yarn, and the record showed that the non-cellulosic waste was first opened, converted into fibre, and then mixed and blended with other fibres before spinning. The classification therefore depended not on a narrow distinction between waste and fibre in the abstract, but on the actual character of the material used in the manufacture of the spun yarn and whether the final yarn contained fibres of non-cellulosic origin. The scheme of the old tariff and the related notifications also showed that wastes could be used in processes resulting in fibre production and manufacture of spun yarn. Applying the plain language of the entry and the principle that tariff terms must be construed so as to give effect to every word, the material used here was held to be fibre of non-cellulosic origin for the purpose of classification.

Conclusion: The yarn was correctly classifiable under Item 18-III(ii) and not under Item 18-III(i), in favour of Revenue.

Final Conclusion: The appeal succeeded, the assessee's classification was rejected, and the impugned appellate order was set aside.

Ratio Decidendi: For classification of blended spun yarn under the old tariff, the decisive test is whether the final yarn contains man-made fibres of non-cellulosic origin, and waste processed into fibre and used in spinning is to be treated according to its role in the finished yarn rather than by a formal distinction between waste and fibre.

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