2017 (3) TMI 232

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....s manufacturing woven fabrics, fire retardant fabrics and chenille fabrics falling under chapter heading 52, 55 and 5801.21/5801.31 of CET. All types of the fabric was transferred to their other two units without payment of duty, under cover of challans. These two units were engaged in the manufacture of made-ups out of the fabrics so received. The department alleged that the chenille fabric is classifiable under chapter subheading 5801.21/5801.31 and accordingly central excise duty @ 16% ad valorem is leviable which the appellant No. 1 failed to pay. The appellant No. 1 claimed that chenille fabric under reference was not actually chenille fabric but was cotton fabric classifiable under sub heading 5208.20 and the same was exempted from wh....

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....ille fabrics but unprocessed cotton fabrics falling under Tariff Heading 5208. He also stated that these goods were exported and even if duty was leviable, they could claim of benefit under Notification 43/2001-CE dt. 26.06.2001 issued under Rule 19(2) of the Central Excise Rules. Hence, the goods were classifiable under Chapter Sub-heading 5208.20. 5. The Ld. A.R. for the Revenue stated that the appellants have purchased chenille yarn and admitted that they had used the chenille yarn as their input. The description of goods on the challan, shipping bills, and export invoices has been shown as chenille fabrics and made-ups. The exemption claimed by them is for unprocessed cotton fabric. Hence, it is not available to chenille fabrics. He ....

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....I is extracted below:- "2. (A) Goods classifiable in Chapters 50 to 55 or in heading No. 58.09 or 59.02 and of a mixture of two or more textile materials are to be classified as if consisting wholly of that one textile material which predominates by weight over any other single textile material." Clearly, Section Note 2 (A) of the Section XI is not applicable to Tariff Heading 5801. Hence, the argument of Ld. Advocate that it should be classified as unprocessed cotton fabric on the basis of predominance of cotton in chenille fabric is untenable. 9. As for the plea of the revenue neutrality, that cannot be an argument to justify wrong classification and availing the benefit of an exemption notification. In a recent judgment in....