Prima facie classification dispute over processed knitted pile fabrics justified waiver of pre-deposit and stay of recovery.

In a classification dispute over processed knitted pile fabrics, the appellants showed a strong prima facie case for waiver of pre-deposit and stay of recovery. They argued that the grey fabric was only cut to convenient machine lengths and then washed, dyed, bleached, hydro-extracted, tumble dyed and dried, without being cut into shapes or sewn. The Department relied on tariff notes treating the goods as made-up textile articles, but the record indicated that the grey fabric had already been classified under Heading 60.01 and the narrow strips relied on by the Department were present at the grey stage. On that basis, the pre-deposit of duty and penalty was waived and recovery stayed during the appeal.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit and stay of recovery in a classification dispute concerning processed knitted pile fabrics.

Analysis: The appellants contended that the fabrics received in grey running length were only cut to convenient lengths for machine use and were subjected to washing, dyeing, bleaching, hydro extraction, tumble dyeing and drying, without any cutting into shapes or sewing. The Department relied on the tariff notes to classify the processed goods as made up textile articles. The material on record showed that the grey fabric itself had been classified under Heading 60.01 and the narrow strips referred to by the Department were already present in the grey stage. On this basis, the appellants established a strong prima facie case that the goods had not been made into shape so as to attract the relevant tariff note for made up articles.

Conclusion: The requirement of pre-deposit of the entire duty and penalty was waived and recovery was stayed during the pendency of the appeal.

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