Exemption for absorbent cotton wool upheld as surgical absorbent lint under the earlier notification scheme.

Absorbent cotton wool manufactured by the assessee was treated as falling under Chapter Heading 3004 and answering the description of surgical absorbent lint for Notification No. 37/86. The prior ruling in the assessee's own case, which treated surgical and absorbent cotton wool as lint for exemption purposes, was followed, and the later Notification No. 185/87 was read as expanding the exemption scheme rather than excluding the earlier benefit. The demand was set aside and the exemption was retained for the disputed clearances.

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Issues: Whether absorbent cotton wool manufactured by the appellant was covered by Notification No. 37/86 as surgical absorbent lint, and whether the later Notification No. 185/87 required a different conclusion.

Analysis: The disputed product fell under Chapter Heading 3004 of the Central Excise Tariff Act, 1985 and the earlier decision in the appellant's own case had already held that lint is the main seed hair of the cotton plant, that lint cotton is used to make surgical cotton or absorbent cotton, and that surgical and absorbent cotton wool is to be treated as surgical absorbent lint for the purpose of Notification No. 37/86. The later Notification No. 185/87 was viewed as expanding the benefit to additional products and removing the packet-weight restriction, not as showing that absorbent cotton wool was excluded from the earlier exemption.

Conclusion: Absorbent cotton wool was held to be covered by Notification No. 37/86 as surgical absorbent lint, and the appeal succeeded.

Final Conclusion: The demand was set aside and the assessee retained the exemption benefit for the disputed clearances.

Ratio Decidendi: Where the nature of the product and the exemption scheme show that absorbent cotton wool answers the description of surgical absorbent lint, a later broader notification does not exclude it from the earlier exemption.

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