Acrylic yarn classification under sub-heading 5504.32 upheld, and the excise duty demand was found unsustainable.

Acrylic yarn containing 100% acrylic fibres was held classifiable under sub-heading 5504.32 of the Central Excise Tariff, not under 5504.90, because the declared classification had been accepted in approved classification lists from 1-3-1986 and no material showed any prior review before the show cause notice. On that basis, the demand raised under Section 11A of the Central Excise Act was unsustainable, and the Revenue's challenge failed.

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Issues: Whether acrylic yarn containing 100% acrylic fibres was correctly classifiable under sub-heading 5504.32 of the Central Excise Tariff Act, 1985, and whether the duty demand raised under Section 11A of the Central Excise Act, 1944 could be sustained.

Analysis: The classification declared by the respondents under sub-heading 5504.32 had been accepted and approved in the classification lists effective from 1-3-1986, and no material showed any review of that classification before issuance of the show cause notice. The tariff position was also supported by the view that yarn containing 100% acrylic is classifiable under sub-heading 5504.32 and not under sub-heading 5504.90.

Conclusion: The classification adopted by the respondents was correct and the duty demand was not sustainable.

Final Conclusion: The Revenue's challenge failed and the impugned order dropping the proceedings was maintained.

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