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

J U D G M E N   T   

GANGULY, J.

1. This  judgment  deals  with  Civil  Appeal  

Nos.3758/2006, 5631/2006, 4686/2006, 5845/2006  

and 5342/2007.  

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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.

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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.”

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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).  

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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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