ORDER
G.A. Brahma Deva, Member (J)
1. This is an appeal filed against the Order-in-Original dated 8-7-1986 passed by the Additional Collector of Customs & Excise, Jaipur.
2. The Central Excise Officer (Anti-Evasion) Division, Ajmer on 7-6-1985 paid a surprise visit to the factory premises of the appellants during the checking of the said godown it was observed that in addition to other yarns, yarns of following description and with markings on respective bales/bags as detailed below were lying :
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S. No. of Markings on cones and bags S. No. marked Total
No. bags lying in Bonded store-room on bags
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1. 6 Polyester/Viscose 2/40s 104 to 109 of 300 Kgs
15/85 50 Kgs each
Lot No. 1553
2. 11 Polyester/Viscose 2/40s 46 to 52 = 7 550 Kgs
15/85 64 to 66 = 3
Lot No. 1555 103 = 1
50 Kgs each
3. 11 Polyester/Viscose 35/65 51 to 61 550 Kgs
2/60s 50 Kgs each
Lot No. 1636
4. 45 Polyester/Cotton 65/35 1 to 21 = 21
2/40s 24 to 29 = 6
Lot No. 2554 31 to 33 = 3
35 to 37 = 3
40 = 1
73 42 to 46 = 5
55 =1
Bags No. 55= 47 Kgs
rest 50 Kgs.
each 2247.0
Kgd.
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3. On examination of RG. 1 maintained under Rules 53 & 17G of the Central Excise Rules, 1944, it was observed that the description of yarn as given above was not entered in relevant pages/sheets. The description and markings on cones containing yarn and on bags in which cones of yarn were packed, reveal that yarn contained therein is of Polyester (i.e. man-made fibres of (non-cellulosic) in respect of serial Nos. 1 & 3 above and is classifiable under Item No. 18-m (ii) of First Schedule to the Central Excises & Salt Act, 1944 and in yarn of serial No. 4, the said yarn contained Polyester (man-made fibres of non-cellulosic origin) and cotton (a natural fibre) and is classifiable tinder Item 18E of the First Schedule to the Central Excises and Salt Act, 1944. In the R.G. 1 register, the pages for accountal of above-said yarns are allotted but the said 73 bags were not found entered in relevant pages of R.G. 1 register. On enquiry, it was intimated that the above-said yarns have been entered in R.G. 1 register against the entries of cellulosic spun yarn and cotton yarn falling under Item No. 18-in(i) and 18A(i) of the First Schedule, as yarn not containing any man-made fibres of non-cellulosic origin as they had not used man-made fibres of non-cellulosic origin i.e. polyester fibre in the manufacture of the said yarn but have used synthetic waste in the manufacture of said yarns. 17 bags bearing lot Nos. 1636, 1553, 1555 and 2554 were seized on the ground that the appellants had not discharged correct duty liability. The sample of the said yarn drawn and sent to the Chemical Examiner, New Delhi and contents of the test report as under:
“Lot No. 1555 :- The sample is two ply spun yarn, composed of man-made fibre of cellulosic origin 87.7% and man-made fibre of cellulosic origin (Polyester) 12.3%.
Lot No. 1553 :- The sample is two ply spun yarn, composed of man-made fibre of cellulosic origin 89.4% and man-made fibres of non-cellulosic origin (Polyester) 10.6%.
Lot No. 1636 :- The sample is two ply yarn, composed of man-made fibre of cellulosic origin 53.8% and man-made fibre of non-cellulosic origin (Polyester) 46.2%.
Lot No. 2554:- The sample is two ply spun yarn, composed of man-made fibre of non-cellulosic origin (Polyester) 61.8% and cotton 38.2%.”
Show cause notice was issued demanding duty amounting to Rs. 59,855.00 short paid evaded by the appellants charging that yarns contained fibre of non-cellulosic nature and accordingly duty was recoverable from them. Show cause notice was duly answered denying the liability. It was contended that yarn was manufactured out of synthetic waste and cellulosic fibre or of cotton it was correctly classifiable under 18-III(i) or 18A(i). It was also contended that the yarn did not contain any man-made fibre of non-cellulosic origin and synthetic waste is distinct from fibres of non-cellulosic origin by referring to Tariff Item 18-IV. The Additional Collector who adjudicated the proceedings negatived the contentions and held that the seized goods were manufactured out of man-made non-cellulosic polyester fibre. He observed that use of 3 bales from the lot (PLT-51) in the manufacture of polyester viscose 48/52,2/40s yarn and marking on bales and cones on the seized goods are sufficient grounds to lead to this conclusion. It is established that man-made non-cellulosic polyester fibre was used in the manufacture of PV and PC yarn of lot No. 2552,1636,1553 and 2554 and 1555. Accordingly he confirmed the demand in addition to imposing redemption fine of Rs. 5,000/- and imposing penalty of Rs. 2,000/-.
4. Shri K.K. Anand, learned Advocate appearing for the appellants submitted that the appellants had purchased 2,000 Kg. of synthetic waste from M/s. Navneet (P) Ltd., of Ludhiana which was used in manufacture of blended yarn covered by lot Nos. 1553, 1555,1636 and 2554. It is clear from the para of the show cause notice, synthetic waste was purchased from M/s. Navneet Synthetics Pvt. Ltd., Ludhiana and non-production of bill of entry by the importer is not criterion to decide that it was not synthetic waste but fibre. He said that synthetic waste was distinct from man-made fibre of non-cellulosic origin and it was only a mistake of dealing clerk entered in R.G. 1 register as NCSW/Viscose and NCSW/Cotton respectively. Mere making wrong entries in the register will not make the goods as polyester viscose or polyester cotton since they are of only synthetic waste. He contended that evidence was placed on record to show that synthetic waste was used in the manufacture of yarn particularly with reference to 3 bales (900 Kgs.) out of 20 bales was used in the manufacture of yarn but same was not considered by the adjudicating authority. He said that synthetic waste is spinable when blended with cellulosic fibres and cotton and textile units are using synthetic waste in the manufacture of blended spun yarn and the fibre has uniform length, uniform, denier, uniform strength and elasticity and uniform crimp whereas the waste does not have any of these characteristics and the commercial values of both are different and though this was admitted by the Collector, still he held that the appellants had used fibres of non-cellulosic origin. The test report of the chemical examiner cannot be relied upon because of the fact that the test report refers to testing of the yarn but there was no test with reference to raw material used therein. He said that the issue in this case has been covered by the ratio of the decision of the Tribunal in the case of Vardhan Syntex 1991 (37) ECR 542 wherein it was held yarn spun, with the aid of power, from synthetic waste of non-cellulosic origin and man-made cellulosic fibre, in which the cellulosic fibre content predominates by weight, cannot be said to contain man-made fibre of non-cellulosic origin, as synthetic waste is not fibre and accordingly such yarn is classifiable under CETI 18-III(i) and not under CETI 18-III(ii). He contended that chemical examiner is not equipped to differentiate non-cellulosic fibre from non-cellulosic waste and with reference to the identical goods sample was tested by SASMIRA and in the report from SASMIRA it is clearly said that “there was considerable variation in denier.” According to the report manifestly absent in the goods so tested and as such the goods cannot be treated as non-cellulosic fibres but non-cellulosic waste falling under Tariff Item 18-IV.
5. Shri Mohan Lal, learned JDR appearing for the Revenue submitted that waste is distinct and different from fibre and it is clear from the investigation as well as from the report of the chemical examiner that the item in question comprised of man-made fibre of non-cellulosic origin (polyester). He said that Vice President has clearly admitted that synthetic waste was used in Lot No. 2552 whereas Lot Nos. 1636, 1553, 2554 and 1555 covering yarn was manufactured out of man-made fibre of non-cellulosic origin. He said that dealing clerk has clearly admitted that yarn in question was made of man-made fibre of non-cellulosic origin and furthermore the appellants were not equipped with machinery for further processing hence such blended yarn of polyester fibre mixed with viscose is classifiable under Tariff Item 18-III(ii) and this issue has squarely been covered by the decision of the Tribunal in the case [of] Modern Syntex (India) Ltd. v. Collector of Central Excise & Customs, Jaipur reported in 1994 (73) E.L.T. 909 (Tri.).
6. We have carefully considered the submissions made by both sides and perused the records with reference to facts. If the yarn spun is from synthetic waste of non-cellulosic origin of man-made cellulosic fibre in which the cellulosic content predominates by weight, it cannot be said it contains man-made fibre of non-cellulosic origin only and accordingly it is classifiable under 18-III(i) and not under 18-HI(ii) as synthetic waste is not fibre as it was held by the Tribunal in the case of Vardhan Syntex (supra). But the point in this case is whether yarn covered by Lot Nos. 1553,1555,1636 and 2554 is made of synthetic waste. From various technical books and finding of the Tribunal it is clearly established that fibre is different from waste. On the basis of examination of chemical or otherwise, an expert can find out whether basic raw material used for the manufacture of yarn was a fibre or synthetic waste. It is clear from the investigation as well as report from the chemical examiner that yarn of these lots was composed of polyester of fibre and viscose. It is not only the examination report but marking on cones and bags confirm that these goods were made of fibre. It is difficult to conceive that it was only a clerical mistake, as argued by the appellants and the clerical mistake can occur in few cones or at the most in one lot but it cannot occur in all the cones of four lots as it was rightly observed by the Collector in his order. Since there is some similarity in characteristic of the yarn either made of fibre or of waste, the appellants cannot take benefit of this similarity on the ground that the goods were made of waste in addition to fibre without substantiating the same. Overall evidence brought on record reveals that yarn in question was made of man-made fibre of non-cellulosic origin and this issue has been properly considered by the Adjudicating Authority in analysing the entire evidence and since we do not find any substance in the arguments of the appellants we are not inclined to remand the matter for reconsideration as prayed for in the facts of circumstances. In the view we have taken, appeal filed by the appellants is hereby dismissed.