ORDER
P.G. Chacko, Member (J)
1. The lower authorities have demanded differential duty from M/s. Dixcy Textiles Private Limited by classifying their goods under SI. No. 42 in the table annexed to Notification No. 7/2003-CE, dated 1-3-2003 attracting Central Excise duty at 10%. The party had removed the goods on payment of duty at 8% in terms of SI. No. 41 of the said table. The demand is for the differential duty (2%).
2. After examining the records and hearing both sides, we find that the goods in question are garments declared as 100% cotton, falling under Chapter 61 of the CETA Schedule. Polyester yarn was used to the extent of 3% in these garments to adorn them with stripes. On these facts, which are not in dispute, the appellants took the benefit of Explanation 1 to SI. No. 41 in the table annexed to the aforesaid Notification. This Explanation reads as under:
Explanation : (1) for the removal of doubts, it is hereby clarified that ‘articles of apparel and clothing accessories of cotton, knitted or crocheted, not containing any other textile material, shall include articles or clothing accessories made from knitted or crocheted fabrics of cotton, not containing any other textile material, even if they contain saving, threads, cords, labels, elastics tapes, zip fasteners and similar items used for stitching, fastening, holding or adornment, of materials other than cotton.
It appears from the impugned order of the Commissioner (Appeals) that the purpose for which 3% polyester yarn was used in the garments has been overlooked and the benefit of SI. No. 41 ibid has been denied to the assessee merely on account of the polyester content in the garments. We find that it is not in dispute that polyester was used to adorn the garments. Hence, prima facie, the appellants were entitled to clear their goods on payment of duty at the rate of 8% and the demand of differential duty is prima facie is not sustainable. Accordingly, there will be waiver of pre-deposit and stay of recovery in respect of the duty and penalty amounts.