C.C.E. Delhi, Delhi-Iii vs M/S. Uni Products (I) Ltd

has given his opinion of the products

manufactured by the respondents-company to the

effect that the products which are

manufactured by the respondents-company cannot

be classified as floor coverings with piled or

looped surface.

5. In the reply to the show-cause notice given by

the respondents-company, they have relied on

the said opinion of Prof. P.K. Banerjee, a

Professor in the Indian Institute of

Technology, who visited the factory of the

respondents and examined the manufacturing

process of the varieties of carpets in

question and gave the said opinion.

6. The Revenue before us also did not dispute the

correctness of the said opinion.

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7. The learned counsel for the respondents-

company also relied on an Order-in-original

No.69/89 dated 29/12/1989 passed by the

Collector, Central Excise, New Delhi as also

the findings recorded in the said order. The

relevant portion of the said order is as

below:

"Chapter-Note (1) of Chapter 57 will not determine the fact that floor covering is floor covering of jute or polypropylene. The said Chapter Note describes and defines the floor covering. Section Note (4) and (14) has to be necessarily considered for this purpose. It is an admitted position that the top surface (exposed surface) does not have a pile or loop surface and hence Clause (b) of Section Note 14 does not apply. Hence in terms of Clause (a) to Section Note 14 whichever textile material predominates in weight that will determine the classification of the product. Since admittedly jute predominates in weight over other textile material, namely, polypropylene goods are classifiable only under heading 5702.20 and the classification already approved does not require any change."

4 8. In the ultimate finding in the said order the

Adjudicating Authority came to the following

conclusion:

"....In the background of these facts, it would be seen that the party's contention based on Chapter Note(1) of Chapter 57 and Sec. Note (2) and (14) of Sec. XI that floor coverings are classifiable under 5702.20 is correct. The show cause notice says that polypropylene constitutes exposed surface and hence floor covering of the party should come under 5702.90 and not 5702.20, in spite of the fact that polypropylene is not a predominating textile but jute alone is predominating textile material. This point made in the show cause notice is without force and is not legally correct. As contended by the party Chapter Note (1) of Chapter 57 is relevant only for deciding whether the product is covered by the expression "carpet and other textile floor coverings". This Chapter Note cannot and does not decide the further question as to whether the product is floor covering of jute or polypropylene. It only says that if the exposed surface of the article textile material, the product is treated as carpet and other textile floor coverings. To say that because exposed surface is polypropylene the product would be treated as floor covering of polypropylene would be a total misreading of Chapter Note(1).

5 On the other hand, as rightly pointed out by the party, the question as to whether the product is floor covering of jute or floor covering of polypropylene can be decided only in terms of Sec. 14(a) of Sec. XI read with Sec.(2) of Sec. XI. Stated briefly these section notes provide that products containing two or more textile materials would be regarded as consisting wholly of that one textile material which predominates by weight over any other single textile material. As already stated it is an indisputed position that the textile material jute predominates by weight over other textile material used in the floor covering namely polypropylene. Hence the floor covering cleared by the party can be classified only under 5702.20 and not under 5702.90. Thus on the merits of classification of floor covering, party's contention alone represents the correct interpretation and the classification already approved by the Assistant Collector is hereby affirmed and confirmed."

9. Strong reliance was placed by the respondents

on the said finding by the adjudicating

authority and the learned counsel for the

Revenue could not point out anything to the

contrary.

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10. Learned counsel for the respondents submitted

that despite the aforesaid finding, the present show-

cause is wholly unnecessary.

11. However, in the said show-cause proceedings

the Commissioner ultimately dropped all penal

proceedings and also the duty demand for the period

beyond six months.

12. Ultimately, the matter rested when the appeal

was filed before the Tribunal by the assessee and the

tribunal in its order dated 30.9.2005 held as follows:

"....It is seen from the manufacturing process as explained by the learned advocate that the carpet is manufactured in a continuous process and the said carpet is to be considered as of one identity rather than as having separate identity of having a exposed surface and under surface. The tacking of the fibers of polypropylene and jute to be further needle punched into Hessian cloth brings into existence one commodity that is carpet."

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13. The tribunal after discussing the Chapter

Notes, Sub-headings and also the Section Notes returned

a finding that the classification should be done on the

basis of the predominance test, that is to say, on the

basis of textile materials which predominate by weight

over other single textile material.

14. The tribunal noted that before the

adjudicating authorities it has been claimed that the

carpets manufactured by the appellants has jute

contents of 75% to 85% and the tribunal noted that "the

revenue has not disputed this".

15. After opining as above, the tribunal went on

to discuss the second question, namely, whether the

Hessian cloth has to be separated for the purposes of

the predominance test or not?

16. After discussing the matter in detail, the

tribunal came to a finding that while determining the

predominance test, it would not be permissible to

exclude base fabric (Hessian cloth).

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17. The tribunal came to the conclusion that the

predominance test of the assessee's products has to be

done taking the product manufactured by it as a whole

and not by separating the layers and then applying the

predominance test.

18. The tribunal also noted that the revenue's

reliance on a single dealer's statement indicating that

the assessee's jute carpets are known in the market as

"Synthetic carpet" is of no consequence especially when

such statement is not substantiated by any evidence.

19. It is well known that the tribunal being the

last authority on fact, it is not proper for this

Court, in exercise of its power under Section 35 L(b)

of the Central Excise Act, 1944, to disturb such

findings of the tribunal since such findings are based

on evidence.

20. For the reasons discussed above, we find no

merit in this appeal. The appeal is dismissed.

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21. Since the same questions are involved in the

other appeals with slight factual modification, those

appeals for the reasons discussed above and also for

the reasons given in Civil Appeal No.7075-7076 of 2005

are also dismissed.

22. There shall be no order as to costs.

.......................J. (D.K. JAIN)

.......................J. New Delhi (ASOK KUMAR GANGULY) September 8, 2009

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