Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.3758 OF 2006
Commissioner of Central Excise ...Appellant(s)
Vs.
M/s. UNI Products (I) Ltd. & Ors. ...Respondent(s)
With
Civil Appeal Nos.5631, 4686, 5845 of 2006
And
Civil Appeal No.5342 of 2007
T
J U D G M E N
GANGULY, J.
1. This judgment deals with Civil Appeal
Nos.3758/2006, 5631/2006, 4686/2006, 5845/2006
and 5342/2007.
1
2. It appears that in all these appeals, the
respondents are manufacturing non-woven floor
coverings where the basic fabric is jute, but
the case of the appellant is that the exposed
surface is made of synthetic textile material
like polypropylene felt or polypropylene fiber
and as such these goods cannot be classified
as non-woven jute floor coverings.
3. In the case of Civil Appeal No.3758 of 2006,
the show-cause notice was issued on 5.5.1997
and the case of the Revenue as set out in
paragraph No. 6.8 of the show-cause notice is
as follows:
“……Therefore, it appears that the said
textile floor coverings are
classifiable as ‘other textile floor
coverings’ under sub heading 5703.90
of CETA leviable to duty @ 30% Adv.
and not as floor coverings of jute
under sub heading 5703.20 of CETA……”
4. The case of the respondents-company as
disclosed in the counter affidavit is that it
has relied on a technical opinion given by
2
Prof. P.K. Banerjee, who has the experience of
research in non-woven textile material and he
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.
3
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.
6
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.”
7
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).
8
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.
9
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
10