1999 (9) TMI 507 - AT - Central Excise

Tribunal rules in favor of respondents in excise duty dispute, classifying product under specific headings

The Tribunal upheld the classification of the product under Chapter Heading 52.06/52.07, determining it as water-proofed fabrics rather than impregnated ... Fabrics - Water-proof fabrics Issues Involved:1. Classification of the product under the correct Chapter Heading.2. Applicability of Central Excise Duty.3. Interpretation of technical terms and manufacturing processes.4. Limitation and suppression of facts.Summary:1. Classification of the Product:The primary issue was whether the product should be classified under Chapter Heading 52.06/52.07 (cotton fabrics subjected to the process of water-proofing) or Chapter Heading 59.06 (textile fabrics otherwise impregnated, coated, or covered). The respondents claimed classification under Chapter 52.06, while the Department argued for Chapter 59.06, citing the Chemical Examiner's report and HSN Notes.2. Applicability of Central Excise Duty:The Department issued a Show Cause Notice (SCN) demanding Central Excise Duty of Rs. 14,16,043.92, alleging that the respondents had suppressed facts to evade duty. The respondents countered that they were a registered SSI Unit and that their manufacturing process did not involve power, thus qualifying for exemption.3. Interpretation of Technical Terms and Manufacturing Processes:The Tribunal examined various definitions and technical literature, including the Fairchild's Dictionary of Textiles and the Handbook on Glossary of Textile Terms. It was noted that waterproof fabrics are generally tightly woven and coated, whereas impregnated fabrics have interstices completely filled with an impregnating compound. The Tribunal concluded that the process undertaken by the respondents was water-proofing, not impregnation, as there was no visible layer formation on the fabric surface.4. Limitation and Suppression of Facts:The respondents argued that the demand was time-barred as they had disclosed their manufacturing process to the Department. The Tribunal upheld this view, noting that there was no evidence of suppression or misstatement.Conclusion:The Tribunal upheld the classification of the product under Chapter Heading 52.06/52.07, aligning with the specific entry for water-proofed fabrics in the Central Excise Tariff Act (CETA) over the HSN Notes. The appeal by the Department was rejected, and the impugned order was upheld.