TaxTMI 
TaxTMI 
1994 (4) TMI 136
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....tral excise duty at the rate of 12% ad valorem. Accordingly, the appellants continued to effect the clearance of the said goods by paying central excise duty at the rate of 12% ad valorem under protest. The appellants filed an appeal before the Collector (Appeals), Bombay against order No. 475/87 dated 17th March, 1987 under which Range Superintendent directed the appellant to classify the goods under Heading 4301.00 of Central Excise Tariff Act, 1985, attracting rate of duty at the rate of 12% ad valorem. The Collector (Appeals) remanded the case to the Assistant Collector for issuing a speaking order after giving the opportunity to the appellants to present their case and in view of the directions issued by the Collector (Appeals) a letter was issued to the appellants as to why the said product should not be classified under Heading 4301.00. The appellants filed a written reply to the show cause notice vide letter dated 23rd July, 1987 wherein it was contended that the fabrics manufactured by them cannot be classified under Heading 4301.00 since the high pile fabrics are manufactured by directly feeding sliver of fabrics (acrylic) along with back yarn into the circular knitting m....
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....erent widths. No artificial fur as such is used in process. Mere use of the word `fur' in describing the fabrics cannot be in any case said to attract their classification under Chapter 43. The fabrics are manufactured by sliver knitting process as stated above which explains how this fur comes out after piling. It has been clearly mentioned in Note 1(c) of Chapter 60 that knitted or crocheted pile fabrics remain classified in this Chapter. The Assistant Collector in his order has observed that the dyed acrylic fabrics are carded and converted into sliver of desired weight. The slivers are fed and circular sliver knitting machine along with back yarn. The fibres are anchored in back yarn during knitting. The grey fabric is passed through stentering machine where back coating chemicals are applied and cured. During stentering the desired width is adjusted and stability is obtained due to back coat chemicals. After stentering the fabric is passed through shearing and polishing machine to get desired pile height and smooth surface. It is seen that knitted pile fabrics is subject to a process of back coating, shearing and electrifying polished and other process as discussed above. It w....
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....able to the product for the purpose of charging additional central excise duty. He had further held that benefit of Notification No. 109/86, dated 27th February, 1986 was available to the product. However, the appellant had claimed it only in classification list No. 2/87 with effect from 19th October, 1987 under this rate of duty applicable to corresponding classification, namely, 5508, depending on slab value, was to be applied and benefit of notification was withdrawn with effect from 19th January, 1988 as a consequence of amendment by Notification No. 3/88 dated 19th January, 1988. 2. Being aggrieved from the aforesaid order, an appeal was filed before the Collector (Appeals) and the Collector (Appeals) has rejected the appeal with certain observations and being aggrieved from the aforesaid order, the appellant has come in appeal before the Tribunal. 3. Shri Ravinder Narain, the learned advocate has appeared on behalf of the appellants. He has pleaded that the appellant is manufacturer of knitted fabrics commercially known as pile fabric. It can also be called synthetic fur fabric. He pleaded that there is no dispute as to classification under Heading 6001.12 and the man-m....
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....d 36 which are the observations of the Collector (Appeals). He argued that even Collector (Appeals) himself on page 36 had observed that knitted pile fabrics are not subjected to any of the processes mentioned in Chapter Note 2 of Chapter 55 or in Heading 55.08. He argued that the Collector (Appeals) himself observed that the appellants' knitted pile fabric is basically a fabric with a high pile of loose and soft fibres mostly of acrylic fibres that are firmly held in position by the yarn which is introduced in the high pile knitting machine. The loose fibre i.e. acrylic in this case in sliver form is fed into the machine together with the base yarn which in the case of the appellants is cotton yarn/polyester textured yarn. The various colour patterns and designs are set with the help of jacquard arrangements. The knitted high pile fabrics consist of desired length of fibre staples which protude out. It was further mentioned that during the manufacture the compressed raw fibres are loosened, then opened up and dyed on the steam vessel in required shades and the dyed fibres are again opened up. The blown fibre is brushed in a parallel manner to bring about sliver on the carding mach....
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.... to Notification No. 3/88 dated 19th January, 1988 where it is mentioned that "Provided that nothing contained in this notification shall apply to knitted or crocheted fabrics of man-made textile materials falling under sub-heading No. 6001.12 of the said Schedule and subjected to the process of bleaching, dyeing, printing, shrink-proofing, tentering, heat-setting, crease resistant processing or any other process or any two or more of these processes." He also reads internal page 4 of Collector (Appeals)'s order and last 12 lines on page 5, and argued that amended Notification No. 109/88 came into effect with effect from 19thJanuary, 1988. He pleaded that the benefit of the notification is not available and pleaded for the rejection of the appeal. 5. Shri Ravinder Narain, the learned advocate in reply has again pleaded for the acceptance of the appeal and has referred to a judgment of the Tribunal in the case of Oswal Industries (P) Ltd. v. Collector of Central Excise reported in 1990 (49) E.L.T. 305 (Tribunal) wherein it was held that "Process of shearing or cropping carried out on knitted acrylic fabrics not being manufacture, eligible for exemption under Notification No. 109/....
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....sp; * Heading 60.01 corresponds to the woven fabric falling under Chapter Heading 55.07 which covers fabrics of man-made staple fibre woven and `not subjected to any process'. The appellants' contention is that the knitted fabric is also not subjected to any process. The woven fabric falling under Heading 55.07 is the only woven fabric to which the appellants' knitted fabric corresponds to, within the meaning of the Explanation to Notification 109/86, whereas the revenue's contention is that the appellants' knitted fabric would correspond to the woven fabric falling under Heading 55.08 of CETA which cover fabrics of man-made staple fibres woven on looms other than handlooms and subjected to the process of bleaching, dyeing, printing, shrink-proofing, tentering, heat-setting, crease-resistant processing or any other process or any two or more of these processes with the aid of the power or steam. With reference to the scheme of Chapter 55 covers fibre yarn and fabric made of man-made staple fibre and tow. Chapter Headings 55.04 to 55.06 cover `yarn' made of man-made staple fibres. Chapter Heading 55.07 covers woven `grey fabric.' This fabric is a complete and id....
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....s (excluding fabrics covered under Heading Nos. 55.11 and 55.12). The Department has heavily relied on the order passed by the Collector (Appeals) and also argued that the appellants are not entitled to the benefit of Notification No. 109/86-C.E. amended by Notification Nos. 1/88 and 2/88 and since further processing has been done, the appropriate classification for levy of duty would be Heading 55.08 and not 55.07. For the proper appreciation we have to look into whether the machine used by the appellants performs the function of tentering/stentering or not. The appellants have filed a certificate from the manufacturer of the machine to manufacture a special type of machine which they wanted to utilise for removal of water from the base fabrics coated with acrylic emulsion, and in the certificate the whole function of the machine for drying and stentering has been explained. Para No. 5 from the said certificate which appears on internal page 3 on page 53 of the paper book is reproduced below :- "5. In the special machine designed for MFF Ltd. the fabric is put on the pin in the stretch condition to a specific width and is subsequently coated with acrylic emulsion on the based s....