Collector of Central Excise, Baroda Vs.
M/S. The Gaekwar Mills Limited  INSC 1293 (11 October 1996)
Bharucha, Suhas C. Sen Sen, J.
is an appeal by the Collector of Central Excise against an order passed by the
customs, Excise and Gold (Control) Appellate Tribunal (CEGAT). The controversy
in this case is about the classification of a particular variety of fabric
known as Sort No.89225 manufactured by the Gaekwar Mills Limited, the
respondent herein. There is no dispute regarding the composition of this fabric
which contains 33% polyester, 32% viscose and 35% cotton.
is a non-cellulosic man-made fibre, while viscose is a cellulosic man-made fibre.
The case of the Collector of Central Excise is that the fabric falls under Item
22 of the Central Excise Tariff Schedule, whereas the CEGAT has taken the view
that it falls under Item No.19 of the Tariff Schedule.
extracts from the aforesaid Tariff Items are given below:- " Item No. 19,
Fabrics" means all varieties of fabrics manufactured either wholly of
partly from cotton and includes dhoties, sarees, Chadders, bedsheets,
counterpanes, table-clothes, embroidery in the piece, in strips or in motifs
and fabrics impregnated, coated or laminated with preparations of cellulose
derivatives or of other artificial plastic materials, if (i) in such fabrics
cotton contain more than 40 per cent by weight of cotton and 50 per cent or
more by weight of non-cellulosic fibres or yarn or both:
II:- Where two or
more of the following fibres, that is to say,
fibre of cellulosic origin
(including silk noil)
(including Bimilipatnam jute or mesta fibre)
fibre of non- cellulosic origin
ramie in any fabric are equal in weight, then such one of those fibres the
predominance of which would render such fabric fall under that item (hereafter
in this Explanation referred to as the applicable Item) among the Item Nos. 19,
20, 21, 22, 22A and 22AA, which read with the relevant notification, if any,
for the time being in force issued under the Central Excise Rules, 1944,
involves the highest amount of duty, shall be deemed to be predominant in such
fabric and accordingly such fabric shall be deemed to fall under the applicable
No.22 Man-Made Fabrics.
fabrics" means all varieties of fabrics manufactured either wholly or
partly from man- made fibres or yarn and includes embroidery in the piece, in
strips or in motifs and fabrics impregnated, coated or laminated with
preparations of cellulose derivatives or of other artificial plastic cellulosic
fibre or yarn, or (ii) non-cellulosic fibre or yarn, predominates in weight:
that in the case of embroidery in the piece, in strips or in motifs and fabrics
impregnated, coated or laminated with preparations of cellulose derivatives or
of other artificial plastic materials, such predominance shall be in relation
to the base fabrics which are embroidered or impregnated, coated or laminated,
as the case may be.
II under Item No.19 shall, so far as may be, apply in relation to this item as
it applies in relation to that item." The Tariff Entries are quite clear
and there is no ambiguity as to their meaning. In order to bring the fabric
manufactured by the respondent within "Cotton Fabrics", the Collector
will have to establish that in such fabric cotton predominates in weight or
such fabric contains more than 40 per cent by weight of cotton and 50 per cent
or more by weight of non-cellulosic fibres or yarn or both. Neither of the two
conditions has been fulfilled in this case. It is not the case of the Collector
that even though only 35 per cent of the fabric is made out of cotton, such cotton
exceeds the combined weight of polyester or viscose fibre which account for 65
per cent of the fabric. "Predominates in "weight", in this
context, must mean weight in excess of the combined weight of the other two
types of fibres. There can be a second type of case where any fabric may
contain more than 40 per cent by weight of cotton and 50 per cent or more by
weight of non-cellulosic fibre (polyester in this case or yarn or both. In such
a case, ever though cotton does not predominating the fabric will be treated as
cotton fabric. That is a legal fiction Which does not come into play in this
case because the fabric contains only 35 per cent cotton and 33 per cent
polyester (non-cellulosic fibre). It is not the case of the Department that the
weight of cotton is more than 40 per cent of the fabric and the weight of non-cellulosic
fibre is 50 per cent or more.
specifically argued on behalf of the assessee before the Tribunal that in order
to predominate in weight, cotton must be more than 50 per cent in weight. This
was not the case here. The facts were not disputed by the Revenue but a legal
argument was advanced that if a fabric comprised of three or four types of fibre,
it was enough if the cotton was the largest constituent of the fabric. The predominant
fibre of the fabric would be cotton. Therefore, the fabric will have to be
treated as cotton fabric. The Tribunal rejected this argument by pointing out
that this contention, if upheld, would lead to absurdity. Even if a fabric was
composed of five different fibres of which cotton was only 2? per cent in
weight, even then, it will have to be held that cotton was the predominant fibre
and the fabric will be cotton fabric. The Tribunal held that the predominance
in Tariff Items 19 and 22 should be absolute predominance, i.e., equivalent to
more than 50 per cent in weight. That being the position in fact, there could
not be any doubt that the fabric in dispute in this case was not cotton fabric.
is considerable force in the view taken by the Tribunal. But we need not
express any final opinion on this point. This case can be disposed of on
another ground. It was pointed out on behalf of the assessee before the
Tribunal that this fabric was not known in the market as cotton fabric. This
fact was not disputed by the Revenue. It is well settled that an excise entry
must be understood in the sense in which it is understood in the market place
unless there is a special definition to the contrary. There is no such
definition or rule in the Excise Act which lays down that even if a fabric
comprises of only 35 per cent cotton, have to be treated as cotton fabric.
asserted before the Tribunal on behalf of the assessee that the fabric under
consideration was known in the trade as "man-made fabric". This again
was not disputed by the Revenue.
behalf of the appellant, our attention was drawn to the case of Collector of
Central Excise v. Rajasthan Spg. & Wvg, Mills Ltd., (1993) Supp. 1 SCC 420.
In that case, the dispute was about classification of three types of yarn
containing polyester, viscose and acrylic fibre. The question was how to
classify such mixed yarns. It was found for a fact that in all the three types
of yarn manufactured by the assessee, the percentage of acrylic fibre was 40
Per cent as compared to the other two fibres which were either 24 per cent and
26 per cent or 45 per cent and 5 per cent.
held that acrylic fibre must be held to predominate in weight in the composite
yarn manufactured by the assessee. The reason given was that Explanation III to
sub- item (iii) under Tariff Item No.18 made it clear that where a composite
yarn contained various types of yarn which were all equal in weight, then the
yarn which attracted the highest amount of duty shall be deemed to be predominant.
of this explanation, it was held that even though the percentage of acrylic fibre
weight-wise was only 50 per cent of the yarn, by virtue of the explanation it
must be treated to be the dominating yarn because it attracted the highest
amount of tax. In such a situation, by legal fiction, acrylic fibre was held to
be the predominant fibre and the yarn was classified accordingly.
appellant cannot derive any assistance from this decision. It merely lays down
that in the case of composite yarn even though acrylic fibre constituted 55 per
cent in weight, it will be deemed to be then predominant fibre by virtue of the
specific statutory provisions to that effect contained in Explanation III to
sub-item (iii) under Tariff Item No.18. The case before us is in respect of
fabric and not yarn. Either percentage-wise or weight-wise, cotton has not been
found to be the predominant fibre as a matter of fact. There is no law that in
such a situation, cotton must be deemed, to be the predominant fibre and the fabric
must be treated as cotton fabric.
view of the aforesaid and also having regard to the facts of the case, this
appeal must fail and is hereby dismissed. There will be no order as to costs.