The central legal point established in the judgment is the correct classification of products under the Central Excise Tariff Act, 1985 and the implications of such classification on the liability of the assessee.

JUDGMENT :

This appeal is directed against the final judgment and order dated 21st March, 2000 passed by the Central Excise and Gold (Control) Appellate Tribunal, New Delhi (for short `the Tribunal') in Final Order No. 96-97/2000-D in Appeal Nos. E/82/99 and E/926/99-D. Revenue is in appeal before us.

2. The issue involved in this appeal is "whether the product knitted fabric and cotton containing elastomaric yarn of width exceeding 30 cm. were, classifiable under Heading 6002.30 or under 6002.92". According to the revenue the same is classifiable under heading 6002.30 but the Tribunal by its order has decided the issue against the revenue and in favour of the assessee. Revenue involved in the instant case is Rs. 1.46 crores.

3. M/s. Jersy India Ltd., hereinafter referred to as the `assessee', was enaged in the manufacturing of knitted fabrics of cotton and other knitted fabrics containing elastomeric yarn falling under Chapter 60 of the Schedule the Central Excise Tariff Act, 1985 (hereinafter referred to as the `Tariff Act, 1985') and had been processing of such knitted fabrics since September, 1994 without obtaining Central Excise Registration Certification as required under Rule 174 of the Central Excise Rules, 1944 (hereinafter referred to as the `Rules'). The assessee was also engaged in the export of such knitted fabrics and was also undertaking knitting and processing of such fabrics on job work basis.

4. A team of Central Excise Officers from the Anti Evasion, Central Excise Commissionerate, Delhi-Gurgaon, visited the factory premises of the assessee on 28-1-1998. The unit was found in operation and it was admitted by the representative of the assessee that lycra and spandex yarn was used for giving elastic effect in the blended fabric and that this yarn had elastic properties as well. Samples of the elastic/elastromeric yarn and knitted fabric containing elastic/elastromeric yarn were drawn. The same was sent to the Chief Chemist, Central Revenue Control Laboratory, Pusa, New Delhi. The Chief Chemist in his report dated 16-3-1998 confirmed that the knitted fabric was of cotton containing 9.3% elastomeric yarn and the samples of yarn were elastromeric yarn.

5. Assessee was served with two show cause notices dated 23-7-1998 and 2-11-1998 directing it to show cause as to why -

"(1) the party should not get themselves registered with the Central Excise Department under Rule 174 of the Central Excise Rules, 1944;

(2) their fabric namely the knitted fabrics of cotton containing elastomeric yarn, of width exceeding 30 cm. should not be classified under Chapter Heading No. 6002.30 for charging appropriate rate of Central Excise Duty leviable thereon;

(3) SSI benefit for the applicable period as stated above or grey/unprocessed fabrics of cotton containing elastomeric yarn of a width exceeding 30 cm. should not be denied for the contravention and reasons as stated above, and Central Excise duty should not be recovered/penalty levied amounting to Rs. 60,18,712/- and Rs. 12,68,206/-."

6. Extended period of limited under Section 11A of the Central Excise Act, 1944, hereinafter referred to as `the Act', was invoked.

7. The assessing authority after going through the relevant record confirmed the demand duty of Rs. 60,18,712.00 and Rs. 12,68,206.00. Equivalent penalty of Rs. 60,18,712.00 and Rs. 12,68,206.00 was imposed under the provisions of Section 11AC of the Act and also imposed Rs. 50,000/- for contravening the provisions of Rule 174 of the Rules.

8. Aggrieved against the aforesaid order, assessee filed an appeal before the Tribunal which has been accepted by the impugned order. Being, aggrieved, the present appeals have been filed by the Revenue.

9. The Tribunal decided the case on merits only and did not go into the question of invocation of the extended period of limitation under Section 11A of of the Act.

10. On the previous date of hearing, it was brought to our notice by the Counsel appearing for the assessee that the company ha