Important point
Running length of unprocessed textiles or non-made up goods would not be covered by TH 59.09 of Schedule Central Excise Tariff Act.

Headnote:Central Excise Tariff Act, 1985—Tariff Heading (TH) 52.02, 54.08 or 59.09—Respondent was manufacturer of grey cotton canvas cloth, belting and duck—Goods were cleared by classifying them under TH 52.02 or 54.08 by respondent—Demand by appellant for differential on ground that goods were classifiable under TH 59.09 and demand was confirmed by Assistant Collector relying on decision in Simplex-I case by CEGAT—Commissioner (Appeals) dismissed the appeal—CEGAT set aside the order following its decision in Jyoti Overseas case—Appeal—Section Note (SN)-6 provided that Chapter 52 to 55 would not apply to “made up” goods—TH 59.09 dealt with textile “article” and not textile fabrics as wrongly assumed in Simplex-I case —Rules for interpretation provided that when goods were prima facie classifiable under two heads or more, classification was to be effected according to Rule 3—Accordingly reasoning of Tribunal in Jyoti Overseas was unexceptional—Goods of respondent were classifiable under TH 52.02 and 54.08.
Held : “Non made up” goods would, therefore, cover running lengths of textiles, unprocessed in the manner specified in the Section Note. Section Note (SN) -6 specifically provides that Chapter 52 to 55 would not apply to “made up” goods. It would logically follow that they would therefore apply to non-made up goods. According to SN-6 Chapters 56 to 60 unless the context so required would also not apply to “made up” goods and Chapters 50 to 55 would not apply to goods of Chapters 56 to 59. Chapter Note (CN)-6 of Chapter 59 clarifies that Heading No. 59.09 applies to specific goods as enumerated in paragraphs (a) and (b) thereof, which do not fall in any other heading of Section XI. It follows that (1) unless the goods fall under paragraphs (a) or (b), they would not be covered by TH 59.09 and (2) that TH 59.09 is the residuary heading to cover all the enumerated goods provided they do not fall in any other heading of Section XI. Paragraph (a) of CN-6 deals with “textile products in the piece, cut to length or simply cut to rectangular (including square) shape (other than those having the character of the products of heading numbers 59.07 and 59.08)”. From this, read with SN-5 and 6, we may infer that the context of TH 59.09 requires that it apply to `made up’ goods. Running lengths of unprocessed textiles or non made up goods therefore would not be covered by this paragraph. (Para 8)
This paragraph of CN-6 also indicates that it refers to ‘made up’ or processed goods and therefore running lengths or bolts of unprocessed fabric are not covered by TH 59.09. “Endless felts” contrary to what was assumed in Simplex I is not a running length of fabric, but a product with no end such as a completed circular length which being without an end or beginning would be endless. TH 59.09 deals with textile ‘articles’ and not textile fabrics as wrongly assumed in Simplex I. Examples of textile articles may be found in TH 59.07 and 59.08 such as textile hose-piping, transmission or conveyor belts or belting. The language of TH 59.09 itself shows that it refers to articles and products other than articles referred to in the Chapter. There is a distinction between articles and products on the one hand and textile fabrics on the other hand as held in Jyoti Overseas. (Para 10)

Judgment

Ruma Pal, J.—The respondent is engaged in the manufacture of Textiles, namely; grey cotton canvas cloth, hundred percent cotton/grey cotton, belting and duck. The issue to be resolved is whether these goods are classifiable under Tariff Headings (TH) 52.02, 54.08 or 59.09 of the Schedule to the Central Excise Tariff Act, 1985. The appellant contends that they are classifiable under TH 59.09. The respondent on the other hand cleared the goods classifying them either under TH 52.02 or 54.08. Consequently on 23rd September, 1992 24 show cause notices were issued by the Excise Authorities to the respondent to show cause why differential duty amounting to Rs. 545,10,838 should not be recovered against the clearances effected during the period 20.7.1987 to 13.8.1992. The respondent showed cause. The Assistant Collector confirmed the demand on the basis of an earlier decision of the Central Excise and Gold Control Appellate Tribunal (CEGAT) in the respondent’s own case reported as Simplex Mills Co. Ltd. vs. CCE Nagpur in 1993(49) ECR 147 (referred to as ‘Simplex I’).

2. Simplex-I had rejected the respondent’s submission that grey belting cloth or canvas cloth which were manufactured by it were classifiable under TH 52.05 or 54.08. These two headings read :

Chapter 52 Cotton 52.2

Heading Sub-heading Description of goods Rate of duty No. No. Basic Additional

1 2 3 4 5

52.05 5205.00 Cotton fabrics,- Nil Nil

a) woven, and

b) not subjected to any process

Chapter 54 Man-made filaments 54.2

Heading Sub-heading Description of goods Rate of duty No. No. Basic Additional

1 2 3 4 5

54.08 50.00 Fabrics of man-made filament Nil Nil yarn (including fabrics obtained from materials of heading Nos. 54.06 and 54.07).

a) woven, and

b) not subjected to any process

3. It was held that fabrics for industrial use fall only under TH 59.09. TH. 59.09 reads :

Chapter 59 Impregnated, coated and laminated fabrics, etc. 59.6

Heading Sub-heading Description of goods Rate of duty No. No. Basic Additional

1 2 3 4

Click Here to Read the rest of this document

2005 Supreme(SC) 377

Important pointRunning length of unprocessed textiles or non-made up goods would not be covered by TH 59.09 of Schedule Central Excise Tariff­ Act.

Cases Referred (1)

Important point
Running length of unprocessed textiles or non-made up goods would not be covered by TH 59.09 of Schedule Central Excise Tariff Act.