1997 (11) TMI 155 - AT - Central Excise

Tribunal Upholds Yarn Classification based on Equal Parts Polyester and Viscose

The Tribunal upheld the Collector (Appeals)'s classification of yarn under sub-heading 5504.29 based on the application of Section Note 2(c) of Section ... Classification Issues: Classification of yarn under sub-heading 5504.29 or 5506.29In this case, the appellant, a manufacturer of yarn, filed a classification list claiming classification under sub-heading 5504.22, which was later disputed by the Assistant Collector who classified the yarn under sub-heading 5506.29. The Collector (Appeals) set aside the Assistant Collector's order and classified the yarn under sub-heading 5504.29, leading to the current appeal.Classification Dispute:The appellant argued that the yarn should not be classified under heading 55.04 as polyester did not predominate in the yarn. The appellant contended that Section Note 2(c) of Section XI of the Excise Tariff was wrongly applied by the Collector (Appeals) as there was no conflict in classifying the goods under the same chapter. The appellant's representative pleaded for the appeal to be allowed solely on this ground.Applicable Law - Section Note 2(c) of Section XI:The Departmental Representative supported the impugned order, citing that Chapter Note 2(c) was applicable. According to Section Note 2(c), when two or more fibers or yarns are equal in weight, the fiber attracting the higher duty shall be deemed predominant, and the yarn shall be classified accordingly. The Department argued that this provision was correctly applied by the Collector (Appeals).Judgment and Analysis:The Tribunal found that the Collector (Appeals) made the correct decision by applying Section Note 2(c) of Section XI. As the yarn in question consisted of equal parts of polyester and viscose, with neither predominating as a single constituent, the provision came into play. The Tribunal emphasized that the fiber attracting the higher duty would determine the classification when two varieties of yarn or fiber are equal in weight. Contrary to the appellant's argument, the Tribunal held that Section Note 2(c) is not limited to disputes between different chapters but extends to disputes within the same chapter. Therefore, the Tribunal upheld the Collector (Appeals)'s classification under sub-heading 5504.29, dismissing the appeal against the classification under sub-heading 5506.29.In conclusion, the Tribunal's decision hinged on the application of Section Note 2(c) of Section XI, which determined the classification of the yarn based on the fiber attracting the higher duty, even when the competing classifications were under the same chapter. The appeal was dismissed, affirming the classification under sub-heading 5504.29.