ORDER
Mrs. Archana Wadhwa
1. Being aggrieved with the Order passed by the Commissioner of Central Excise, Calcutta dropping the proceedings initiated for recovery of duty of Rs.34,26,064.00 against the respondents has been challenged by the Revenue in the present appeal.
2. The dispute relates to classification of “Stiffened Fabrics”. The facts in brief, are that the respondents are engaged in the processing of cotton fabrics of their own manufacture as well as cotton fabrics received from outside parties, the duty liability on which was being discharged under Chapter 52. On checking of such processed fabrics, it was found that due to coating of cotton fabrics with gum and amylaceous substance imparted stiffness to the fabrics and as such, possessed essential character of being classified under heading No.59.01. The representative sample of the said fabrics was drawn and the report of the Chemical Examiner was to the following effect:-
“The sample is a cut-piece of white somewhat stiff woven fabric made of cotton yarns. It is coated with gum & amylaceous substance. It has the characteristics of stiffened textile fabrics.”
Accordingly, the Revenue felt that as the fabrics are subjected to treatment with gum and amylaceous substance to give a special effect on the fabrics (i.e.stiffness), such fabrics would fall under sub-heading 5901.10 as stiffened fabrics. Accordingly, a notice proposing to confirm the demand of duty and to impose personal penalty, was issued. The case was originally, a notice proposing to confirm the demand of duty and to impose personal penalty, was issued. The case was originally adjudicated by the Commissioner, vide his Order dated 26.7.95 holding the goods as “stiffened fabrics” classifiable under sub-heading 5901.10. Being aggrieved by the said adjudication order, the assessee had preferred an appeal before the Tribunal. The Tribunal vide Order No.A-775/CAL/96 dated 12.9.96 remanded the case for de-novo adjudication with the following observations:-
“4.2. After carefully considering the above submission of both sides, we are of the view that the determination of this very question goes to the root of the matter. The duty liability would devolve on gum and amylaceous substance. Further, the condition to be satisfied before the goods can be classified under sub-heading, is that they must be put to use later in the outer cover of a book or the like. We find that there is no such evidence in respect of use of the goods on record for that purpose or for similar purpose. In the aforesaid facts and circumstances of the case, we also notice that the adjudicating authority has not considered the stand taken in the case of Sunita Textiles Ltd. which was put forth before it by the appellant herein and has also not whispered a word about it in the impugned order. We feel that it is appropriate for the adjudicating authority to deal with the plea taken before it. In the aforesaid facts and circumstances of the case, we are of view that the matter is fit for remand and we order accordingly.”
During de-novo proceedings, the Commissioner observed that the report of Chemical Examiner is insufficient and not specific whether the nature and extent of coating specified the condition laid down in the judgement in Sunita Textiles case i.e.interstics between the yarn to be completely filled throughout stiffness of the matter and whether the stiffness of the fabrics are permanent in nature or not. He has also found that there was no evidence to show that the goods were used for the purpose mentioned in the show cause notice. Accordingly, he held that the subject goods did not merit classification as stiffened fabrics under sub-heading 5901.10. Accordingly he dropped the proceedings against the assessee. Being aggrieved with the said Order in de-novo proceedings, the Revenue has filed the present appeal which is before us.
3. Shri V.K. Chaturvedi learned S.D.R. for the Revenue submits that the Commissioner has heavily relied upon the decision of the C.E.G.A.T. in the case of Sunita Textiles Ltd. as reported in 1997 (62) ELT-932(T). The essential question involved is whether bleached sheeting of cotton fabrics as processed could be classified Buckram and similar stiffened fabrics under heading No.59.01. He argues that the Commissioner failed to examine the nature of the fabrics and has not ascertained as to what extent the goods were exactly comparable to and merited application of the ratio of the Sunita Textiles Ltd. case. As such, he failed to observe the difference in the nature of the product. According to him, in the present case the fabrics are coated with gum and amylaceous substance used for cover of book or the like. Hence the ratio of the Sunita Textiles should not be held to be applicable directly to the facts of the present case considering the nature of the processed fabrics. The learned S.D.R. submits that nothing prevented the adjudicating authority to ask the Chemical Examiner to give a clear and specific report at the de-novo adjudication stage. When there was no doubt expressed about the nature of coating by the Chemical Examiner and that the Chemical Examiner had reported that the sample had a characteristics of stiffened fabrics it was not proper on the part of the adjudicating authority to hold that the goods fall outside the heading No.59.01. He, therefore, prays for setting aside the Order or remand the same for fresh adjudication by the Commissioner.
4. Shri S.K. Roychowdhury, learned Advocate appearing for the respondents reiterates the submission contained in their memorandum of Cross objection filed by the respondents. He argues that the question of verification of end-use arises only when the fabric concerned is held to be stiffened fabrics. He submits that stiffness show be lasting and permanent and not momentary/temporary. He argues that the Commissioner has correctly applied the ratio of the Sunita Textiles case. He, therefore, pleads that there is no merit in the appeal and prays for its rejection.
5. We have given our careful consideration to the submissions made from both sides. From a reading of the impugned Order, we find that the Commissioner has relied upon the report of the Chemical Examiner and has applied the ratio of the earlier decision of the Tribunal in the case of Sunita Textiles Ltd. The Tribunal in the said case has laid down the criteria for considering the goods as stiffened fabrics so as to be classifiable under heading 59.01. It was observed by the Tribunal in the said as under:-
“An decision impregnated fabric is one in which interstics between the yarn are to be completely filled with impregnating compound throughout the thickness of the material. The definition of Buckram and Library Buckram also indicates that it is heavily sized. The definition of sizing indicates that it is a generic term for compounds when applied to yarn or fabric form a more or less continous solid film around the yarn and individual fibres.”
Thus it is seen that for holding a fabric as stiffened fabrics it must satisfy the condition that the interstics between the yarns shall be completely filled with impregnating compound throughout the thickness of the material. Moreover, such fabrics should be heavily sized which means that the compound when applied to yarn or fabric should form a more or less continuous solid film around the yarn and individual fibres. In the instant case, the Chemical Examined by him. His observation as regards the stiffness of the fabric is that the same is “somewhat stiff” and “has the characteristics of stiffened fabrics”, and as rightly observed by the Commissioner, the above description falls far short of the basic requirement precisely, “It is a stiffened fabric.” The nature of stiffness of the fabric does not satisfy the basic parameters for holding the fabrics to be stiffened fabrics. There is also nothing on record to show that the stiffness of the fabric is permanent and not temporary, which effect is achieved by the fabric while undergoing the process of finishing by application of various products. The Revenue has also not placed on record any evidence to show that the fabrics being processed by the respondents are meant for book binding cloth, so as to (sic) for being classified under heading 59.01. Even the Revenue in their appeal has not produced any evidence to that effect. Accordingly, we find that the Commissioner has passed a correct Order by applying the ratio of the Tribunal’s decision in the case of Sunita Textiles Ltd. and in view of the Chief Chemical Examiner’s report, The appeal filed by the Revenue is thus rejected. Cross Objection filed by the respondent firm also stands disposed of.
(Pronounced)