2009 Supreme(SC) 1548

2009(8) Supreme 345
SUPREME COURT OF INDIA
D.K. Jain and Asok Kumar Ganguly, JJ.
The Commissioner of Central Excise, Bhubaneswar-I — Appellants
versus
M/s. Champdany Industries Limited. — Respondents
Civil Appeal No. 7075-7076 of 2005
Decided on : 8-09-2009

IMPORTANT POINT
It is well settled that unless the foundation of the case is made out in the show-cause notice, Revenue cannot in Court argue a case not made out in its show-cause notice.

Headnote:Central Excise Tariff Act, 1985 – Note 1 of Chapter 57 of the First Schedule - Respondent manufacturers of carpets by interlacing yarns of three different types, namely, jute, cotton and polypropylene – Case of the respondent– company that in the carpets which it manufactures jute always predominates by weight over each of other single textile material – However Revenue’s case that the surface of the carpet being entirely of polypropylene, the same cannot be classified as jute carpet – Stand of the Revenue was that once the goods are falling under Chapter 57, Chapter Note 1 to Chapter 57 becomes relevant- However held that said stand of the Revenue was not correct - A perusal of said Chapter note makes it clear that the same merely defines the term carpet and other floor coverings “for the purposes of this Chapter”, namely, Chapter 57 – Limited role played by Chapter Note is only to decide whether the goods in question are carpets and other textile floor coverings for the purposes of Chapter 57 or not – Once the goods are carpets and falling under Chapter 57, the role of Chapter Note 1 comes to an end – Since the goods admittedly fall under Chapter 57 and consist of more than two or more textile materials, it has to be classified on the basis of that textile material which predominates by weight over any other single textile material-As in the goods in question jute admittedly predominates by weight over each other single textile material, the said Carpet could only be classified as jute carpets and nothing else –. The contrary interpretation given by Revenue is not correct- No dispute by Revenue that by predominance test the content of the jute in the carpet was highest and more than 50% – Polypropylene fiber had also been accepted by the Revenue as a textile material falling under Chapter 55 – Hence mere fact that the surface of the carpet was polypropylene fiber, it did not cease to become jute carpet – So argument by Revenue on the basis of surface or essentiality test was erroneous-No reason to upset such concurrent findings which were neither perverse nor could they be said to be based on no evidence – Hence, appeals filed by Revenue dismissed as being devoid of merit. (Paras 18 to 25, 58 to 60)

       Facts of the Case :

        Respondent were manufacturers of carpets by interlacing yarns of three different types, namely, jute, cotton and polypropylene herein in the instant case. Case of the respondent-company was that in the carpets which it manufactures jute always predominates by weight over each of other single textile material. However Revenue’s case that the surface of the carpet being entirely of polypropylene, the same cannot be classified as jute carpet . Stand of the Revenue was that once the goods are falling under Chapter 57, Chapter Note 1 to Chapter 57 becomes relevant.

       Findings of the Court :

        A perusal of said Chapter note makes it clear that the same merely defines the term carpet and other floor coverings “for the purposes of this Chapter”, namely, Chapter 57 . Limited role played by Chapter Note is only to decide whether the goods in question are carpets and other textile floor coverings for the purposes of Chapter 57 or not . Once the goods are carpets and falling under Chapter 57, the role of Chapter Note 1 comes to an end . Since the goods admittedly fall under Chapter 57 and consist of more than two or more textile materials, it has to be classified on the basis of that textile material which predominates by weight over any other single textile material.As in the goods in question jute admittedly predominates by weight over each other single textile material, the said Carpet could only be classified as jute carpets and nothing else. The contrary interpretation given by Revenue held not correct. No dispute by Revenue that by predominance test the content of the jute in the carpet was highest and more than 50% . Polypropylene fiber had also been accepted by the Revenue as a textile material falling under Chapter 55.Hence mere fact that the surface of the carpet was polypropylene fiber, it did not cease to become jute carpet. So argument by Revenue on the basis of surface or essentiality test was held erroneous. No reason to upset such concurrent findings which were neither perverse nor could they be said to be based on no evidence. Hence, appeals filed by Revenue were dismissed as being devoid of merit.