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of <h1>Tribunal reclassifies imported goods, upholds Chapter 59 classification for rubberized textile fabrics. Fresh consideration ordered.</h1> The Tribunal set aside the reclassification of imported goods as narrow elastic tapes and upheld the appellants' classification under Chapter 59 as ... Elastic Cloth in running length Issues Involved:1. Classification of imported goods under the appropriate Customs Tariff Heading.2. Applicability of Section 28(1) of the Customs Act for short levy of duty.3. Consideration of commercial parlance and end-use in classification.4. Interpretation of Chapter Notes of the Customs Tariff Act, 1975, and Central Excise Tariff Act.Detailed Analysis:1. Classification of Imported Goods:The primary issue revolves around the correct classification of the imported goods described as 'Garment Accessories, Elastic cloth in running length (13 mm width).' The appellants initially classified the goods under Chapter heading 5906.99 of the Customs Tariff Act, 1975, and Chapter heading 5905.90 of the Central Excise Tariff Act for CVD purposes. The Customs authorities, however, reclassified the goods under Chapter sub-heading 5806.20, leading to a higher duty rate.The Assistant Collector and the Collector (Appeals) upheld the reclassification under Chapter sub-heading 5806.20, arguing that the goods were narrow elastic tapes, not elastic cloth. The appellants contended that the goods were rubberized textile fabrics, which should be classified under Chapter 59, specifically heading 5906.99.2. Applicability of Section 28(1) of the Customs Act:The Customs authorities issued a demand notice under Section 28(1) of the Customs Act for a short levy of Rs. 4,43,484/-. The appellants had initially paid a duty amount of Rs. 3,59,676.45 based on their classification. The reclassification resulted in a short levy, prompting the demand notice. The Assistant Collector confirmed the short levy based on the revised classification.3. Consideration of Commercial Parlance and End-Use:The appellants argued that the classification should consider the commercial parlance, nature, characteristics, and end-use of the goods. They maintained that the goods were used as accessories in the manufacture of garments, specifically protection garments for ladies, and should be classified accordingly. The Collector (Appeals) rejected this argument, stating that commercial parlance alone could not determine the classification and that the goods' nature and characteristics were more relevant.4. Interpretation of Chapter Notes:The appellants referred to Chapter Notes to support their classification under Chapter 59. They argued that Chapter 58 excludes elastic fabrics and elastic trimmings, and Chapter 59.11 covers textile fabrics impregnated, coated, covered, or laminated with rubber. They provided a test report indicating that the goods were fully woven fabrics consisting of 76% Nylon and 24% Rubber, supporting their classification under Chapter 59.The Customs authorities, however, argued that the goods were narrow woven elastic fabrics, satisfying the criteria under Chapter heading 5806.20, which includes woven fabrics containing more than 5% elastomeric yarn or rubber thread.Judgment:The Tribunal carefully considered the submissions and reviewed the records, including the test report provided by the appellants. It noted that the test report showed the goods were fully woven fabrics with 76% Nylon and 24% Rubber, indicating they had undergone the process of covering Nylon with rubber. This supported the appellants' classification under Chapter 59.The Tribunal found that the lower authorities had not adequately considered the test report and the appellants' contentions. It emphasized that Chapter Note 1 of Chapter 58 excludes textile fabrics impregnated, coated, covered, or laminated with rubber, which aligns with the appellants' classification under Chapter 59.Consequently, the Tribunal set aside the impugned order and remanded the matter to the original authorities for de novo consideration. The lower authorities were directed to consider the appellants' contentions, including the case law and HSN Notes, and pass an appropriate order after granting an opportunity of hearing to the appellants.Conclusion:The judgment highlights the importance of considering test reports, commercial parlance, end-use, and Chapter Notes in determining the correct classification of goods under the Customs Tariff Act. The matter was remanded for a fresh decision, ensuring a thorough review of all relevant factors and evidence.
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