IMPORTANT POINT
Water proofed fabric impregnated with coating visible to naked eye was liable to be classified under Central Excise Tariff Schedule heading 59.06 and not under heading 52.07.

JUDGMENT

Rajendra Babu, CJI.-These appeals arise out of an order made on 3.8.1996 by the Customs, Excise and Gold (Control) Appellate Tribunal (for short the Tribunal) in which questions that arise for consideration are (i) whether the water-proofed fabrics are classifiable under Heading 52.07 of the Central Excise Tariff Schedule as claimed by the appellant or under Heading 59.06 as held by the Tribunal, and (ii) whether the extended period of limitation under proviso to Section 11A of the Central Excise Act, 1944 is invokable in the present case and consequently whether penalty under rule 173Q of the Central Excise Rules, 1944 is imposable on the appellant.

2. The two competing entries are as under:

"Heading 52.07.

Cotton fabrics (including fabrics covered under Heading Nos. 52.09, 52.10 and 52.11),-

(a) woven on looms other than handlooms, and

(b) subjected to the process of bleaching, mercerizing, dyeing, printing, water-proofing, shrink-proofing, organdie processing or any other process or any two or more of these processes without the aid of power of steam."

"Heading 59.06.

Textile fabrics, otherwise impregnated, coated or covered (including fabrics covered partially or fully with textile flocks or with preparations containing textile flocks)."

3. The Tribunal took note of the prospectus issued by the appellants in which equity was sought to be raised from general public which described the process as under :-

"Grey cotton canvas for CPT is processed through application of a common proofing mixture and dried in a drying range. The common proofing mixture is prepared with ingredients consisting mainly of wax of different grades, aluminium stearate and copper napthanate (and colouring agents, if required)."

4. It was stated that the process carried out by the appellants is held out as of impregnation to make the fabric water proofed. Whereas the fabrics manufactured by the appellants were tested and it was found on test by the chemical examiner to be an impregnated/coated fabric with the layer of coating visible to the naked eye. They noticed that even rubber coated or plastic coated fabrics will be water proof; that if the appellant s plea is accepted, then the scope of tariff items in Chapter 59 will become restricted to the extent that even if the cotton fabric is coated and impregnated so long as it was water proof, it will fall under tariff heading 52.07 or 52.06, as the case may be. After analysing various headings, the Tribunal took the view that fabric manufactured by the appellants is impregnated one and the same, therefore, has to be considered as fabric impregnated with materials other than those mentioned under tariff 59.02 and 59.05; that fabrics also passes the muster of note 4 of Chapter 59 which note was at serial No. 5 after coming into force of the new tariff subsequently during the relevant period as being coated with materials other than materials under Heading 59.01 to 59.05 with coating visible to the naked eye. On analysing Chapter 59, it was noticed that the Chapter covers impregnated cotton and textile fabrics among other things. The Tribunal, in particular, noticed that process as applicable to any textile and does not change the texture of the fabric nor add to its weight. After referring to some text books, the Tribunal noticed that interpretation has to be made on the basis of Chapter notes and, therefore, the Tribunal was of the view that the impregnated fabrics with a coating visible to the naked eye have been correctly held to be assessable under tariff heading 59.06.

5. Next, contention put forth on behalf of the appellants that their plea for re-testing their fabrics was not accepted by the Tribunal on the basis that nothing prevented the appellants from asking for re-test of the samples as provided for under the rules at an appropriate stage of the proceedings. This contention has been rightly dealt with by the Tribunal and calls for no interference.

6. The nex