ORDER
Lajja Ram, Member (T)
1. In this appeal filed by the Revenue, the order-in-original dated 28-9-1989 passed by the Collector of Central Excise, Chandigarh, is under challenge. The respondents, M/s, JCT Mills Ltd., Phagwara, were engaged in the manufacture of, among other products, three varieties of Chaddars – variety No. 555, variety No. 5555 and variety No. Jagat Guru. Dutiability of all these three varieties of chaddars was for consideration before the adjudicating authority. The Revenue had filed the present appeal only with regard to the variety ‘Jagat Guru’. The Collector of Central Excise, Chandigarh, had held that the goods in question were not ‘made up’ textile articles within the meaning of ‘made up’ under Section Note 5 of Section XI of the Central Excise Tariff. He had also expressed doubt whether the assessee had suppressed any facts to justify the application of the extended period of limitation. The Revenue had pleaded that with regard to the variety ‘Jagat Guru’ no price list was filed and in the classification list the goods were just described as fabrics (unbleached). The goods were woven with a demarcation at a regular interval of 2.5 meters along the length of the fabric; they were stamped as ‘chaddars’ and after cutting the individual piece at the demarcated line, it was not necessary for their use that the edges were to be hemmed. After cutting at the demarcated line, the chaddars were usable as such. It had been pleaded by the Revenue that the ‘Jagat Guru’ variety of Chaddar was a ‘made up’ textile article for classification under sub-heading No. 6301.00 of the Central Excise Tariff.
2. We have heard Shri Satnam Singh, SDR, for the appellants/Revenue and Shri J.P. Kaushik, Advocate, for the respondents, M/s. JCT Mills Ltd., when the matter was posted for hearing on 12-3-1998.
3. Shri Satnam Singh, SDR, submitted that admittedly the goods in question were Chaddars, were stamped and sold as Chaddars and that the goods were entirely covered by the definition of ‘made up’ articles as given in the Central Excise Tariff. The respondents themselves have called the goods in question as Chaddars. He submitted that the Chaddar as manufactured by the respondents was a made up textile article. It was usable as such without any further working. By suppressing the facts, the respondents had described the disputed goods as fabrics. He pleaded that the order passed by the Collector of Central Excise, Chandigarh, be set aside and it be held that the Jagat Guru variety of Chaddars was a made up textile article classifiable under sub-heading No. 6301.00 of the Central Excise Tariff.
4. Shri J.P. Kaushik, Advocate, replied that the Chaddars were woven in running length and marking at a distance of 2.5 metres at the fabric and putting of additional weft yarn at the demarcated line will not make the goods as made up textile article within the meaning of ‘made up’ as given in the Section Note 5 of Section XI of the Central Excise Tariff. He also referred to the Harmonised Commodity Description and Coding System (HSN) Explanatory Notes.
5. We have carefully considered the matter and have given our due thought and consideration to the submissions made by both the sides.
6. The respondents, M/s. JCT Mills Ltd., Phagwara, were engaged in the manufacture of, among others, ‘Chaddars’ of cotton fabrics which they declared simply as cotton fabrics. Under the scheme of the Central Excise Tariff, cotton fabrics, as such, were classifiable differently from the ‘made up’ textile articles. As what could be considered as made up textile article has been explained in the tariff itself. The ‘Jagat Guru’ variety of chaddars was woven with a demarcation in between two intended pieces. Each piece was of length of 2.5 metres. The single chaddar could be separated simply by cutting at the demarcations. Individual pieces were stamped as ‘Chaddar’. They were packed and sold in pairs. They were not sold in running length in meters. In reply to the show cause notice, it was admitted by the respondents that the sort ‘Jagat Guru’ was packed and sold in grey form after cutting the continuous sheeting cloth into pairs of the chaddars. In other words, two chaddars were cut from the running length and packed and sold in pairs. The consumer could easily cut the single piece for which a demarcated line was provided in between the pairs. At the time of the personal hearing before the Collector of Central Excise, Chandigarh, the respondents had agreed that the goods in question were predominantly used as Chaddars. The dividing line described as excess weft threads were said to have been put to demarcate the length. With the excess weft threads at the demarcated line, the need for sewing or for other working to make them usable was avoided and the goods were ready for use by merely cutting at the dividing excess weft threads.
7. It is clear from the facts on record that to demarcate the individual pieces along the selvedge, there were five lines consisting of extra threads contributing greater thickness to cloth along these lines with the outer most line running at the edge. The adjudicating authority had noted as under :
“The purpose of these lines obviously is to provide a substitute for hem i.e. protect unravelling of yarn to prevent fraying of the edges. The ends of the fabrics are cut without any hemming or knotting and do not have any fringed or tasseled edges. However, in the middle of the fabrics there are two sets of four lines each running from selvedge to selvedge, i.e. lines along the weft with a distance of 20 cms. between the two. Since these two sets of lines are put at periodical intervals of 2.5 mts. along the length of the fabric, the cut edges also have the lines at some distance depending upon how exactly they have been cut.”
8. Sub-heading No. 6301.00 of the Central Excise Tariff covers the following :
“Made up textile articles not elsewhere specified including blankets (other than of wool), tarpaulins, tents, sails for boats.”
Under Section Note 5 of Section XI of the Central Excise Tariff, the expression ‘made up’ has been defined as under :
(1) Merely cut, otherwise than into squares or rectangles, for example, dress patterns of textile material, articles with their edges pinked (e.g. certain dusters) are also regarded as made up.
(2) Produced in the finished state, ready for use (or merely needing separation by cutting dividing threads) without sewing or other working. Goods of this kind include products knitted or crocheted directly to shape and certain dusters, towels, table cloths, scarf squares, blankets, etc., with threads along the warp left unwoven or the weft edges cut to form a fringe. Such articles may have been woven separately on the loom, but may also have been simply cut from lengths of fabric which have bands of unwoven threads (generally warp threads) at regular intervals. These lengths of fabric, from which ready-made articles of the types described above may be obtained by simply cutting the dividing threads, are also considered as “made up” articles.
However, rectangular (including square) articles simply cut out from larger pieces without other working and not incorporating fringe’s formed by cutting dividing threads are not regarded as “produced in the finished state” within the meaning of this Note. The fact that these articles may be presented folded or put up in packings (e.g. for retail sale) does not affect their classification.
(3) Hemmed or with rolled edges or with a knotted fringe (whether or not incorporating added threads) at any of the edges (e.g. handkerchiefs with rolled edges and table covers with knotted fringes) but excluding fabrics the cut edges of which have been prevented from unravelling by whipping or by other simple means.
(4) Cut to size and incorporating drawn-thread work. In this connection “drawnthread work” means simply the withdrawing of certain warp or weft threads after weaving without further operation (e.g. by embroidery) on the material. The pieces of material so treated are often intended for further manufacture into lingerie.
(5) Assembled by sewing, gumming or otherwise. These articles, which are very numerous, include garments. It should be noted, however that piece goods consisting of two or more lengths of identical material joined end to end, or composed of two or more textiles assembled in layers, are not regarded as “made-up”. Nor are textile products in the piece composed of one or more layers of textile materials assembled with padding by stitching or otherwise.
(6) Knitted or crocheted to shape, presented in the form of a number of items in the length.
9. The expression ‘made up’ has been further explained in the HSN Explanatory Notes as under :
(a) Cut otherwise than into squares or rectangles;
(b) Produced in the finished state, ready for use (or merely needing separation by cutting dividing threads) without sewing or other working (for example, certain dusters, towels, table cloths, scarf squares, blankets);
(c) Hemmed or with rolled edges, or with a knotted fringe at any of the edges, but excluding fabrics, the cut edges of which have been prevented from unravelling by whipping or by other simple means;
(d) Cut to size and having undergone a process of drawn thread work;
(e) Assembled by sewing, gumming or otherwise (other than piece goods consisting of two or more lengths of identical material joined end to end and piece goods composed of two or more textiles assembled in layers, whether or not padded);
(f) Knitted or crocheted to shape, presented in the form of a number of items in the length.
10. The adjudicating authority had observed that he could not agree that two set of lines which had been incorporated as an indicator to show where a single piece was to be separated, were the dividing threads for the purpose of Section Note 5(2). He had argued that if that was the case, then there was no need for two sets. He had noted as under :
“The expression ‘dividing threads’ obviously relates to the goods like certain types of towelling, blankets which are produced continuously but can be used merely by cutting along certain specially provided ‘dividing threads’ at specific intervals.”
We do not consider that the expression ‘dividing threads’ had such a restricted meaning. The ‘dividing threads’ means, the threads at which the division of the article is demarcated and the goods were usable after cutting the pieces at such demarcated space. There was a clear demarcation in this case. The goods were stamped as Chaddars. They were clearly marked at each length of 2.5 metres. They were packed and sold in pairs. The threads at the dividing lime were strengthened with a view to obviate the need for sewing. After cutting the individual pieces, the Chaddar was ready for use, as such, without any further working. At page 5 of his order, the adjudicating authority had observed as under:
“According to me, these are not strong enough to prevent any fraying or even to withstand rough handling such as washing, crumbling, to which the fabric can reasonably be expected to be subjected. A hem is necessary to be stitched along these edges at least before the fabric is used as bed sheets or bed covers or put to any other uses to which a ‘Chaddar’ can be put. It could perhaps be argued that, given the state of things as they exist some people might put it to use without putting a hem. This may perhaps be so. I note, however, that the cheapest of the varieties is priced according to the price lists at Rs. 47.50 per pair (ex-factory). The retail price would be about Rs. 70 per Pair (Rs. 35 per piece) Hemming the edges would not cost more than Rs. 2/- and I find it extremely difficult to believe that a person who spends Rs. 35/-would not be able to or willing to spend Rs. 2 or 3 for having the hems stitched. No doubt a person who buys a coat may use it without a button or with a broken button or so. But this is not the normal use to which the coat is put or intended to be put. On this score also I would hold that the charge is not established and that the goods are not ready for use even after they are cut.”
We do not find that these observations flow from the facts on record. The argument relating to rough handling, washing, crumbling etc. do not appear to be relevant to the issue under consideration. The goods had to be assessed as presented for assessment in the light of the rules of interpretation, section, chapter notes and the wordings of the Tariff entries. The cost of hemming, stitching etc. is also not an issue for consideration.
12. The goods in question were for common use. They were not of controlled variety. The markings as Chaddars indicated the purpose for which the goods were meant. The adjudicating authority had observed as under :
“The goods are evidently intended to be used as Chaddars, but this does not lead to the conclusion that they are in fact chaddars in the form in which they are cleared.”
Admittedly the goods were usable as Chaddars and the classification had to be determined in the light of the Section Notes already extracted above. After cutting along the demarcated line, no further working was required for using the goods as Chaddar. We, therefore, do not find any force in these observations of the adjudicating authority.
13. Thus, on merits, in so far as the “Jagat Guru” variety of Chaddar is concerned, we do not agree with the view taken by the adjudicating authority.
14. On the question of limitation also, we do not agree with the view taken by the learned Collector of Central Excise, Chandigarh. In respect of the Jagat Guru variety, classification list was filed describing the goods as fabrics ‘unbleached’. No price list was filed. The Revenue had agreed that the price list was filed with regard to variety 555 and variety 5555 and had not filed any appeal with regard to these two varieties. In the case of Jagat Guru variety, however, the goods were wrongly described in the classification list and further no price list was filed. The adjudicating authority had observed that in the price list the goods have been described as Chaddars. This is so only in respect of variety 555 and 5555 which are not before us in these proceedings. No price list had been filed in respect of variety Jagat Guru and thus there was no question of its description as Chaddar. On this issue, however, we find that the adjudicating authority had given no separate findings with regard to the variety ‘Jagat Guru’ In view of the facts placed before us by the Revenue in this appeal that in the classification list, the ‘Jagat Guru’ variety was described as fabrics (unbleached) and that no price list was filed in respect of this variety, we consider that, in the interest of justice, on this point alone the matter needs to be remanded to the jurisdictional adjudicating authority. We, therefore, while holding that the Jagat Guru variety of Chaddar was a made up textile article classifiable under sub-heading No. 6301.00, remand the matter on the question of limitation to the jurisdictional adjudicating authority who should provide an opportunity to the respondents to put up their defence and then pass an appealable speaking order, as per law.
15. Thus, in so far as the classification is concerned, the appeal filed by the Revenue is allowed. However, on the question of limitation, the matter is remanded to the jurisdictional adjudicating authority with the above observa-tions.The appeal is disposed of in the above terms.