2006 (1) TMI 373

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....ppeals are being disposed of by this common order after hearing both sides. 2. (a) The appeals involving a dispute regarding classification and dutiability of goods of description 'embroidered fabrics', initially received in gray condition from the concerned individual customers and thereafter processed by the appellants, by subjecting the said gray goods to the process of bleaching, dyeing etc., Thereafter such processed goods are returned to respective owners. (b) The dispute in the matter covers the period up to 2001 to 2002 when the tariff description of Heading 58.05 of Central Excise tariff read as follows :- "58.05 - Embroidery in the piece, in strip or in motifs.       - Manufactured with the aid of....

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....ric relying upon the provision contained in sub-clause (iii) of para 2(b) of the sub-heading note under Section XI of Textile & Textile Articles which reads as under :- "In the case of embroidery of No. 58.05 and goods thereof, only the ground fabrics shall be taken into account. However, embroidery without visible ground and goods thereof shall be classified with reference to the embroidering thread alone". The lower authority ordered the classification under Chapters 52, 54 & 55 as per the base fabric used for manufacturer of processed embroidery fabric as the case may be and held that goods were not eligible for clearing the same under S.H. 5805.90 at "NIL" rate of duty and that para 2 of sub-heading note of Section XI of Textile and T....

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....s and considering the material it is found :- (a)     The HSN Chapter 58 and CETA 1985 are not aligned. Therefore, once base fabrics are embroidered, which in this case they were, at the gray stage, they would fall under Heading 5805.90 of CETA 1985. On reading of the entries under 5805, even if fabrics were embroidered/embroidery machine operated with power & or depending on whether embroidery visible ground then classifiable under Ch. Heading 5805.11 or 5805.19 will not be called same. The classification now after processing of Gray fabric has to be arrived and not that of Gray Embroidered fabrics. By reading & applying Chapter note 8 of Chapter 58, this deemed manufacture vide Chapter 8 would attract levy afresh unde....