TaxTMI 
TaxTMI 
2011 (7) TMI 972
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....nterest and penalty for hearing of this appeal and also for stay on recovery thereof till the disposal- of the appeal. 1.1 Facts leading to this appeal and the stay application are, in brief, as under. 1.2 The appellant have Central Excise registration as manufacturer of carpets and floor covering, felts, car mats and other carpets and floor coverings (whether or not made of jute etc.), chargeable to Central Excise Duty under sub-headings 5703.90, 5602.90 and 5703.20 of the Central Excise Tariff. The period of dispute in this appeal is from October 2001 to July 2004. The bulk of the duty demand in this case is in respect of carpets. The main raw material for manufacture of carpets is jute (Hessian cloth) and polyester/polypropylene fibres. Polyester/polypropylene fibres are fed into a machine to reduce the fibre lump size. The fibre, thereafter, is subjected to carding machine from where it emerges as uniform web. The web, thereafter, is cross lapped on an apron and then fed into tacker for 1st stage needle punching by using the barbed needles for the purpose achieving the holding capacity. The tacked web, thereafter, is fed into a pre-needle loom with a jute woven ....
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....-02 to 31-3-03 Rs. 74,37,063/- in respect of textile floor coverings and Rs. 71,759/- in respect of fabric felt 4. VI(MP) Dem(12) Adj.- 31/2004 DATE : 18-3-2004 1-4-03 to 31-12-03 Rs. 1,11,59,489/- in respect of textile floor coverings and Rs. 1,54,706/- in respect of fabric felt 5. VI(MP) Dem(12) Adj.- 57/2004 Date : 2-6-2004 1-1-04 to 31-3-04 Rs. 51,32,122/- in respect of textile floor coverings and Rs. 49,047/- in respect of fabric felt 6. VI(MP) Dem(12) Adj.- 115/2004 Date : 10-1-2005 1-4-2004 to 8-7-2004 Rs. 36,06,694/- in respect of textile floor coverings and Rs. 1,83,297/- in respect of fabric felt Grand Total Rs. 3,87,99,640/- 1.4 It is the above show cause notices which were adjudicated by the Commissioner vide order-in-original as mentioned in para one above, against which this appeal alongwith stay application have been filed. 1.5 Since there is seven day's delay in filing of the appeal against the Commissioner's order, the appellant have also filed an application No. E/COD/70/2010 for condonation of delay. 2. In view of the facts disclosed in the appl....
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....ecided as to whether a particular textile floor covering is of jute or of other material, that Hon'ble Supreme Court in the case of CCE, Bhubaneswar-I v. Champdany Industries Ltd. reported in 2009 (241) E.L.T. 481 (S.C.) has held that Note 1 to Chapter 57 of the Tariff merely defines the term "carpets and other floor covering" and this chapter note is useful only to decide whether the goods are "carpets and other floor covering" for the purpose of Chapter 57 and the role of this chapter note comes to an end once the goods are determined as carpets falling under Chapter 57 and once by applying Chapter Note 1 to Chapter 57, it has been determined that the goods are carpets, the question as to whether the carpets are of wool, jute etc. has to be determined on the basis of pre-dominate as per Note 2(A) and 14(A) of Section XI, that Hon'ble Supreme Court in the case of CCE v. UNI Products (I) Ltd. reported in 2009 (241) E.L.T. 491 (S.C.) has held that non-woven floor coverings having basic fabric as jute and exposed surface of synthetic textile material and in which jute content predominates by weight are classifiable as carpets of jute under sub-heading 5703.20 and not under sub-headin....
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....e the exposed part of the carpet consists of polyester or polypropylene fibre, the carpet in question cannot be called carpet of jute, that for determining the classification of the products of Chapters 56 to 63 in which the carpets fall, sub-heading Note 2(B)(i) of Section XI is also applicable according to which for application of this rule i.e. sub-heading Note 2(A) readwith Note 2 of Section XI, where appropriate, only the part which determines the classification under Rule 3 of the interpretation of schedule to Central Excise Tariff Act, 1985 shall be taken into account, that in view of Rule 2(B)(i), the pre-dominant material alone will not determine the classification of the carpet and the same would be determined on the basis of the material which gives the carpet its essential character, that since it is the polyester/polypropylene fibre of which the exposed portion of the carpet is composed of, which gives it the essential character, the carpets, in question, cannot be classified as carpet of jute but would be correctly classifiable under sub-heading 5703.90 as "other carpets", that Hon'ble Supreme Court's judgment in the case of CCE, Bhubaneswar-I v. Champdany Industries ....
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....y on the basis of predominance of jute fibre by weight, that the appellant have not been able to establish prima facie case in their favour, that the judgments of the Hon'ble Supreme Court cited by them are not applicable to this case and that in view of this, this is not the case for waiver from the requirement of pre-deposit. 4. Since the order could not be passed within six months from the date of hearing of the stay application, the matter was re-heard on 10-6-2011. 5. We have carefully considered the submissions from both the sides and perused the records. 5.1 The point of dispute in this application filed by the appellant is as to whether for hearing of this appeal, the requirement of pre-deposit of duty demand, interest and penalty under Section 35F of the Central Excise Act, 1944 can be waived and whether its recovery can be stayed till the decision of this appeal. As held by Hon'ble Supreme Court in the case of Benara Valves Ltd. v. CCE reported in 2006 (204) E.L.T. 513 (S.C.) and Indu Nissan Oxo Chemicals Industries Ltd. v. Union of India reported in 2008 (221) E.L.T. 7 (S.C.), for determining the question of waiver from the requirement of pre-depo....
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....polyester or polypropylene fibre and thereafter, this combination of tacked web consisting of polyester/polypropylene fibre and jute woven cloth is needle punched from surface side downward in a machine, which results in emergence of the unfinished floor covering. Subsequently the jute surface is coated with a suspension of styrene acrylate and other fillers to give the product the required stability, stiffness and strength. Thus, in the product, in question, there is a ground/base fabric of jute on which tacked web of polyester/polypropylene fibre has been fixed by needle punching. There is no dispute that it is the polyester/polypropylene surface which is the exposed surface when in use. There is no dispute that taking the base fabric and exposed surface as a whole, it is jute fibre which pre-dominates by weight and it is on this basis that the Appellant, relying upon sub-heading Note 2(A) readwith Note 2 of Section XI plead that the carpets, in question, have to be treated as non-woven carpets of Jute falling under sub-heading 5703.20. Coming to the main point of dispute in the above factual background, we agree with the appellant's plea that Chapter Note 1 of Chapter 57 is to b....
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....s a single textile material. (C) The provisions of paragraphs (A) and (B) above apply also to the yarns referred to in Notes 3, 4 and 12 below." "Sub-heading note 2(A) and 2(B) of Section XI "2.(A) Products of Chapters 56 to 63 containing two or more textile materials are to be regarded as consisting wholly of that textile material which would be selected under Note 2 above for the classification of a product of Chapters 50 to 55 consisting of the same textile materials. (B) For the application of this rule :- (i) where appropriate, only the part which determines the classification under rule 3 for the interpretation of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) shall be taken into account. (ii) in the case of textile products consisting of a ground fabric and a pile or looped surface, no account shall be taken of the ground fabric; (iii) in the case of embroidery of heading 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 threads alone." 7.1 From the peru....
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....sting of different materials or made up of different components and goods put up in sets, which cannot be classified under Rule 3(a), shall be classified as if they consist of the material or component which gives them their essential character. We are of prima facie view that in this case, it would be appropriate to apply Rule 3(b) of the Rule of interpretation of tariff and determine the classification on the basis of that part which determines the classification under Rule 3(b). 8.1 In this case, as discussed above, we are of prima facie view that it is the exposed surface consisting of polyester or polypropylene fibre which gives the product its essential character and not the base fabric of jute and therefore, the goods, in question, have to be treated as polyester/polypropylene carpets and not the carpet made of jute just because overall predominance is of jute fibre. For determining the classification of the goods, in question, which are composite articles, the component while gives them their essential character cannot be ignored and in such a case, Rule 3 of the Rules of Interpretation of Tariff has to be invoked. In view of the provision of sub-heading Note 3(b)(i....