Judgement

( 1 ) THE appellant weaves grey tyre cord fabrics in running length after obtaining nylon yarn from tyre companies. It cleared the goods manufactured by it as tyre cord fabric of high-tenacity yarn of nylon or other polyamides, polyesters or viscose rayon under Tariff Heading 59. 02 of the Schedule to the central Excise Tariff Act, 1985. At that point of time the goods classifiable under Tariff Heading 59. 02 were exempted from payment of basic duty by virtue of Notification No. 63/87 dated 1/3/1987 as amended. The assessee, however, was still liable to pay additional duty which was duly paid.

( 2 ) ON the allegation that the goods were classifiable under Tariff Heading 59. 09 a show-cause notice was issued to the appellants by the respondent authority seeking to levy Central excise duty amounting to Rs. 17,88,76,842. 00 comprising of basic duty of Rs. 15,55,45,080. 00 and special duty of rs. 2,33,31,762. 00. Penalty was also sought to be imposed under Section 173-Q. During the pendency of the matter before the Commissioner, a sample of what was stated to be the respondents goods was sent to the National Test house. The test report showed that the sample received by them was tested against the value as specified in p. 348 of the Encyclopaedia of Textiles, fibres and Non-Woven Fabrics and found it to have less than the high tenacity prescribed. Accordingly, it was submitted that the sample was made of filament yarn and normal tenacity. The appellant had contended: (i) As per CBEC Circular No. 22 of 1988-CX 1 dated 10/8/1988 their fabrics are to be classified under Heading 54. 08 attracting "nil" duty. Even otherwise it cannot be classified under Tariff Heading 59. 09. (ii) Proof of customers letter was produced to show that the yarn were of high tenacity. (iii) Such fabrics were always classified under Tariff Heading 59. 02 in their Madurai factory. (iv) HSN states that yarn at warp stage should be of high tenacity. (v) The observation that tenacity of 0. 5/cn/tex does not prove that it was 0. 55/cn/tex or lesser. (vi) Test result on viscose yarn cannot be applied to fabrics made of polyamides. (vii) The test result stated that it was a non-woven fabric. Hence, it cannot be classified under Chapter 59. (viii) The test result applied to the lot from which the samples were drawn. (ix) Extended period not applicable.

( 3 ) THE Commissioner rejected the submissions of the assessee and confirmed the demand as raised in the show-cause notice and imposed penalty of the equivalent amount. The appellant preferred an appeal before the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT ). CEGAT remanded the matter to the Commissioner being of the view that the appellant had not been provided with sufficient opportunity to produce documents before the adjudicating authority in support of its submission that it was using high-tenacity yarn in the manufacture of its fabrics.

( 4 ) WHEN the matter came back to the Commissioner the appellant reiterated the points noted earlier. Relying solely on the test report, the collector again rejected the appellants submission and reaffirmed the order passed by him earlier. When the matter came up before the Tribunal, the tribunal also relied upon the test report in rejecting the appellants appeal. It does not appear from the reasoning of the Tribunal that the several points raised by the appellant before it, particularly the one relating to the classification of the goods under Tariff Heading 54. 08, were at all considered. The appellant made an application before the Revenue to rectify what according to the appellant was obviously an oversight. The rectification application was also rejected. Two separate appeals have been preferred by the appellant, the first from the original order of the Tribunal rejecting the appeal and the second from the order rejecting the rectification application.

( 5 ) BEFORE us, the appellant had submitted that the sole piece of evidence on which the Commi