Industrial-use textile classification and suppression threshold: adhesive coated fabrics fell under the specific heading, and extended limitation was unsustainable.

Adhesive coated fabrics described as textile products suitable for industrial use were classifiable under Heading 5909.00 rather than the residuary Heading 5906.90, because the goods matched the specific industrial-use entry and were not excluded by Chapter Note 6; the department's prior approval and its own circular supported that classification. The extended limitation period under Section 11A was also not sustainable, as the assessee had disclosed the goods as for industrial use, the department knew the assessee was a job worker and had access to raw-material details, and non-disclosure of the precise end-use industry did not amount to suppression of facts. The departmental demand therefore failed.

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Issues: (i) Whether adhesive coated fabrics were classifiable under Heading 5909.00 or under Heading 5906.90 of the Central Excise Tariff Act, 1985; (ii) Whether the extended period under Section 11A could be invoked on the basis of alleged suppression of facts.

Issue (i): Whether adhesive coated fabrics were classifiable under Heading 5909.00 or under Heading 5906.90 of the Central Excise Tariff Act, 1985.

Analysis: The classification list had described the goods as textile products and articles suitable for industrial use, combined with adhesive coating and release paper. The department itself had approved classification under Heading 5909.00 for the relevant period, and the goods answered the description of articles of a kind suitable for industrial use. Heading 5906.90 was only a residuary entry for textile fabrics otherwise impregnated, coated or covered, and Chapter Note 6 did not exclude the goods from Heading 5909.00. The Board's circular and the department's own acceptance of the classification supported this view.

Conclusion: The adhesive coated fabrics were classifiable under Heading 5909.00 and not under Heading 5906.90, in favour of the assessee.

Issue (ii): Whether the extended period under Section 11A could be invoked on the basis of alleged suppression of facts.

Analysis: The goods were disclosed in the classification list as intended for industrial use, and the department was aware that the assessee functioned as a job worker for a shoe manufacturer and had obtained the raw-material details from the supplier. There was no obligation on the assessee to specify the exact end-use industry in the classification list. In these circumstances, suppression of facts was not established, and the invocation of the extended period was not justified.

Conclusion: The extended period under Section 11A was not sustainable, in favour of the assessee.

Final Conclusion: The classification adopted by the department could not be sustained, the demand based on the extended period failed, and the appeal succeeded.

Ratio Decidendi: Goods described and accepted as suitable for industrial use are classifiable under the specific industrial-use heading, and mere non-disclosure of the precise end-use industry does not constitute suppression warranting the extended limitation period when the department had the relevant facts available.

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