of Central Excise, Jalandhar Vs. M/S. Rajiv Textile Industries & Anr 
Insc 255 (15 April 2005)
Pal, Arijit Pasayat & C.K. Thakker Ruma Pal, J.
the years 1995-96, 1996-97 and 1997-98, the respondent Textile Mills cleared
grey cotton canvas clothes and grey cotton fabrics, without payment of any
central excise duty on the ground that the products were classifiable under
Chapter 52 of the Central Excise and Tariff Act 1985 under which the rate of
excise duty was nil at the relevant point of time. According to the Revenue
Authorities the goods were classifiable under sub-heading 5911.90 of the Tariff
and liable for central excise duty at the rates specified on the Tariff. A show
cause notice was issued on 27th December, 2000 why central excise duty should not be recovered and why penal action
should not be taken against the respondent. In the meanwhile the respondent-
Textile Mills were closed down in September, 1997 and M/s. Moti Lal Traders
started functioning from the same premises with the same machinery.
Additional Commissioner of Central Excise relying Nagpur: 1993 (49) ECR 147 confirmed the
demand of duty and also imposed personal penalty on the respondent and ordered
interest on the delayed payment. Duty was also demanded from M/s. Moti Lal
Traders and personal penalty as well as interest was levied.
respondent and M/s. Moti Lal Traders both preferred appeals before the
Commissioner of Central Excise (Appeals). The appeals were allowed by following
the decision of a larger Bench of the Tribunal in Jyoti (130) ELT 446 which
overruled the decision in Simplex (supra) and held that cotton fabrics which
were not 'made up' were correctly classifiable under Chapter 52 and not TH
59.09 (subsequently numbered as 5911.09). The Tribunal dismissed the
appellant's appeal on the same ground.
decision in Jyoti Overseas Limited (supra) has been approved by this Court in
our judgment dated 1st
March, 2005 in C.A.
Nos. 2816-2818/2002, Commissioner Ltd. We therefore hold that the goods
manufactured by the respondent were classifiable under Chapter 52 and not under
Chapter 5911.90 as contended by the Revenue. The appeals are accordingly