REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7075-7076 OF 2005

The Commissioner of Central Excise, ...Appellant(s) Bhubaneswar-I

- Versus -

M/s. Champdany Industries Limited ...Respondent(s)

J U D G M E N T

GANGULY, J.

1. Along with this appeal other appeals were  

heard  together.   There  are  some  common  

questions  but  factually  this  case  is  

different  from  other  cases.   So  this  

judgment will govern these two appeals.  

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2. The  respondent  in  these  two  appeals  are  

manufacturers  of  carpets  by  interlacing  

yarns  of  three  different  types,  namely,  

jute, cotton and polypropylene.  It is the  

case of the respondent-company that in the  

carpets which it manufactures jute always  

predominates  by  weight  over  each  of  the  

other single textile material.     

3. In the case of M/s. Champdany Industries  

Limited,  at  an  earlier  stage  of  the  

proceedings  an  order  was  passed  by  the  

Commissioner  (Appeals)  on  27.06.1995,  

whereby  the  Commissioner  (Appeals)  

remanded  the  matter  to  the  original  

adjudicating  authority  to  decide  whether  

the carpets manufactured by M/s. Champdany  

Industries  Limited  have  separate  base  

fabric.  The  Commissioner  found  that  the  

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said question is technical in nature and  

in order to remove any doubt, matter was  

referred  to  an  expert  body  like  Jute  

Commissioner Office for its opinion.   

4. Pursuant  to  the  said  remand  order,  the  

Department  drew  samples  of  the  carpets  

manufactured  by  the  respondent  and  sent  

the  same  to  the  Jute  Commissioner’s  

office.  The Jute Commissioner got these  

samples tested by the expert body of the  

Jute  Industry,  namely,  Indian  Jute  

Industries  Research  Association  and  the  

report of the said association shows that  

jute  predominates  by  weight  over  each  

other single textile material in the said  

carpets and the said carpets did not have  

any base fabric.   

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5. In the show-cause notice, which has been  

issued  in  this  case,  these  facts  are  

admitted.   In  the  adjudication  order  

passed  in  this  case  by  Assistant  

Commissioner  of  Central  Excise  and  

Customs, Bhubaneswar, this fact has also  

been noted and from the said adjudication  

it will appear that the jute content in  

those carpets is 51.45% in B.L. and 52% in  

S.M. Those B.L. and S.M. are the varieties  

of carpets manufactured by the respondent-

company  and  in  these  two  Civil  Appeals,  

namely C.A No. 7075-7076 of 2005 we are  

concerned  with  those  two  varieties  of  

carpets.    

6. Despite  the  said  report,  the  Revenue’s  

case  is  that  the  surface  of  the  carpet  

being entirely of polypropylene, the same  

cannot be classified as jute carpet.   

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7. Apart  from  the  aforesaid  opinion  of  the  

expert, the Deputy Commissioner of Central  

Excise  as  well  as  Department’s  Chemical  

Examiner  also  visited  the  respondent’s  

factory  and  examined  its  process  of  

manufacture and tested the samples drawn  

on  the  spot.   The  Department’s  Chemical  

Examiner also found that those carpets do  

not  have  any  base  fabric  and  the  jute  

predominates  by  weight  over  each  other  

single textile material and the percentage  

of  jute  was  more  than  50%.   This  also  

appears from the adjudication order of the  

Assistant  Commissioner  of  Central  Excise  

and Customs, Bhubaneswar.  

8. The  Revenue  even  after  accepting  those  

reports issued a show-cause notice,  inter  

alia, on the ground that the surface of  

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the  jute  carpets  was  entirely  of  

polypropylene and therefore, as per Note 1  

of Chapter 57 of the First Schedule to the  

Central  Excise  Tariff  Act,  1985  those  

carpets  cannot  be  classified  as  jute  

carpets  but  are  classifiable  as  

polypropylene  carpets.   The  said  notice  

related to the period from December 1991  

to May 1999.   

9. Respondent-company,  however,  disputed  the  

said  contention  of  the  Revenue  and  an  

adjudication  order  was  passed  on  

26.11.1999 by the Assistant Commissioner.  

In  the  said  order,  the  Assistant  

Commissioner accepted the reports referred  

to  hereinabove  and  also  accepted  the  

position  that  in  those  carpets  jute  

predominates  by  weight  over  each  other  

single textile material and those carpets  

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do not have any base fabric.  In spite of  

the  aforesaid  position,  the  Assistant  

Commissioner relying on Chapter Note 1 of  

Chapter 57 held that those carpets cannot  

be classified as jute carpets but they are  

polypropylene carpets.   

10. Against  the  said  order  dated  26.11.1999  

the  respondent-company  filed  an  appeal  

before the Commissioner (Appeals) and the  

Commissioner (Appeals) by an order dated  

13.03.2000  allowed  the  appeal.   In  the  

said  order,  the  Commissioner  (Appeals)  

held  that  the  interpretation  of  the  

Assistant Commissioner of Chapter Note I  

of  Chapter  57  was  not  correct  and  the  

Commissioner  (Appeals)  came  to  a  

conclusion that as per the Section Notes  

any  product  which  contains  two  or  more  

textile materials are to be classified as  

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consisting of that textile material which  

predominates  by  weight  over  similar  

textile materials.  It may be noted that  

following  the  classification  order  dated  

26.11.1999  the  Assistant  Commissioner  

passed  a  quantification  order  dated  

30.03.2000,  but  since  the  appeal  of  the  

respondent-company  in  respect  of  the  

classification  order  of  Assistant  

Commissioner dated 26.11.1999 was allowed,  

the  appeal  against  the  quantification  

order was also allowed by the Commissioner  

(Appeals) on 25.08.2000 by following order  

dated  13.03.2000  in  the  classification  

proceedings.   

11. Against those orders dated 13.03.2000 and  

25.08.2000 the Revenue filed two appeals  

before the Customs, Excise and Service Tax  

Appellate  Tribunal  (hereinafter  referred  

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to  as  “the  Tribunal”).   Thereafter,  the  

Tribunal  by  an  order  dated  26.09.2000  

dismissed  both  the  appeals  filed  by  the  

Revenue.   

12. It may be noted in this connection that  

before  the  Hon’ble  Andhra  Pradesh  High  

Court petitions were filed in relation to  

classification at the stage of show-cause  

notice.  The High Court of Andhra Pradesh  

interfered  in  those  show-cause  

proceedings.  As  the  Revenue  filed  their  

appeal  against  those  show-cause  

proceedings, this Hon’ble Court held by a  

judgment and order dated 05.05.2004 that  

the High Court ought not to interfere in  

matters  of  classification  at  the  show-

cause  stage.  Thus,  the  judgment  of  the  

High Court was set aside and the matter  

was  remanded  to  the  authority  for  

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adjudication.   Thereafter,  the  Tribunal  

heard the matter afresh and dismissed the  

appeal of the Revenue by an order dated  

05.04.2005.  Against the said order of the  

Tribunal this appeal has been filed by the  

Revenue.   

13. The order of the Tribunal which has been  

impugned herein has been reported in 2006  

(193) ELT 295.  In paragraph 9 at page 299  

of the report, the Tribunal held that in  

the  carpets  manufactured  by  the  

respondent-company  jute  predominates  by  

weight  over  each  of  the  other  single  

textile material.  The Tribunal found that  

this  has  been  admitted  by  the  Assistant  

Commissioner in its order dated 26.11.1999  

in  view  of  the  tests  done  by  the  

Departmental Chemical Examiner on the spot  

and during the visit to the factory of the  

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respondent-company  which  has  also  been  

admitted from the reports of Indian Jute  

Industries  Research  Association.  

Therefore,  this  factual  position  is  

admitted by the Revenue.   

14. In view of such admitted factual position,  

the Tribunal held that such carpets were  

clearly  classifiable  as  jute  carpets  as  

the  test  of  predominance  of  jute  over  

other  single  textile  material  is  the  

deciding  factor  for  classification  

purposes.   

15. Admittedly,  the  case  of  the  Revenue  is  

that  the  product  falls  under  Chapter  57  

and  it  contains  two  or  more  textile  

materials. In fact that is the case of the  

Revenue  in  the  Show-cause  notice  and  in  

the order of the Assistant Commissioner.

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16. The necessary corollary from the aforesaid  

stand  of  the  Revenue  is  that  once  the  

goods  are  falling  under  Chapter  57,  

Chapter  Note  1  to  Chapter  57  becomes  

relevant. The said Chapter Note is set out  

below:

“For the purposes of  this  Chapter,  the  term  ‘carpets  and  other  textile  floor  coverings’  means  floor  coverings  in  which  textile  materials serve as the exposed surface  of  the  article  when  in  use  and  includes  article  having  the  characteristics  of  textile  floor  coverings  but  intended  for  use  for  other purposes.”

17. The  Revenue  also  placed  reliance  on  the  

said  Chapter  Note.  In  fact  the  Revenue  

wanted  to  classify  the  said  carpets  as  

otherwise than jute carpets by relying on  

the said Chapter note.

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18. In our view the said stand of the Revenue  

is  not  correct.  A  perusal  of  the  said  

Chapter note makes it clear that the same  

merely defines the term carpet and other  

floor coverings “for the purposes of this  

Chapter”, namely, Chapter 57.

19. Here we must be conscious of the limited  

role played by Chapter Note.  It is only  

to  decide  whether  the  goods  in  question  

are  carpets  and  other  textile  floor  

coverings for the purposes of Chapter 57  

or not.  Once the goods are carpets and  

falling  under  Chapter  57,  the  role  of  

Chapter Note 1 comes to an end. It is also  

the case of the Revenue that the Chapter  

Note 1 cannot be pressed into service for  

the purpose of classification.

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20. Reference in this connection may be made  

to the relevant statutory provisions laid  

down in Section 2(A) and 14(A) of Section  

XI of the Central Excise Tariff Act, 1985.  

Those provisions are set out below:-

“2(A) Articles classifiable in Chapters  50 to 55 or in Heading No. 58.06 or 59.02  and of a mixture of two or more textile  materials  are  to  be  classified  as  if  consisting  wholly  of  that  one  textile  material which predominates by weight over  any other single textile material.”

“14(A) Products  of  Chapters  56  to  63  containing two or more textile materials  are to be regarded as consisting wholly of  that  textile  material  which  would  be  selected  under  Note  2  above  for  the  classification of a product of Chapters 50  to  55  consisting  of  the  same  textile  materials.   

(B) For the application of this rule:

(i) In  the  case  of  textile  products consisting of a base  fabric  and  a  pile  or  looped  surface,  no  account  shall  be  taken of the base fabric;

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(ii) In  the  case  of  embroidery,  only the base fabric shall be  taken into account.”

21. The  classification  thereafter  has  to  be  

covered under one heading or sub-heading of Chapter  

57. The question of classification of such carpets  

under  one  or  other  heading  or  sub-heading  of  

Chapter  57  has  to  be  decided  on  the  basis  of  

description of such heading/sub-heading read with  

the relevant Section Notes and Chapter Notes. This  

also flows from Rule 1 of the “General Rules for  

the Interpretation of the said Schedule” and these  

Rules are part of the Central Excise Tariff Act,  

1985.

22. Rule  1  of  the  said  Rules  provides  that  

classification shall be determined according to the  

terms of the Headings and any relative Section or  

Chapter Notes.

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23. In the instant case as per Section Notes  

2(A) and 14A for the period between 1994-1995 and  

Section Note 2(A) read with sub-heading Note 2(A)  

thereafter, the inter-se classification has to be  

done under different headings and sub-headings.

24. Since  the  goods  admittedly  fall  under  

Chapter 57 and consist of more than two or more  

textile materials, it has to be classified on the  

basis of that textile material which predominates  

by weight over any other single textile material.  

As  in  the  goods  in  question  jute  admittedly  

predominates  by  weight  over  each  other  single  

textile  material,  the  said  Carpet  could  only  be  

classified as jute carpets and nothing else.

25. This  Court  finds  that  this  logic  and  

reason is in consonance with the interpretation of  

the  Chapter  Note,  Section  Note  and  the  sub-

headings.  The contrary interpretation given by the  

Revenue is not correct. In fact the Revenue wanted  

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to classify the carpets under the residuary sub-

heading 5702.90 of Heading 57.02.  Both Headings  

57.01 and 57.02 are set out below:

“57.01 Carpets  and  other  textile  floor  coverings, knitted, woven, tufted,  or flocked, whether or not made up  (excluding  dari,  sataranji,  namdahs,  jute  carpets  and  coir  carpets) -  In or  in any  relation to  the  manufacture of which any process  is ordinarily carried on with the  aid of machines:

5701.11 - Not embossed 30% 5701.12 – Embossed 30% 5701.90 – Other Nil

57.02 Carpets  and  other  textile  floor  coverings  (other  than  those  of  heading No.57.01) including floor  coverings of felt, whether or not  made up

5702.10 – Floor coverings of Coir Nil 5702.20 – Floor coverings of jute 10% 5702.90 – Other 30%”

26. The  relevant  entries  from  the  Central  

Excise Tariff 1997-98 are extracted below:

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“57.02 Carpets  and  other  textile  floor  coverings  (other  than  those  of  heading No.57.01) knotted, woven,  tufted or flocked, whether or not  made up

- In or in  relation  to  the  manufacture  of  which  any  process  is  ordinarily  carried  on  with  the  aid  of  machines:

5702.11  -  Of coconut fibres (coir)  Nil 5702.12  -  Of jute Nil 5702.19  -  Other 25% 5702.90 -  Other  Nil”

“57.03  Other Carpets and other textile  floor coverings, whether or not  made up

 5703.10 - Of coconut fibres (coir)  

Nil 5703.20 - Of jute Nil 5703.90 - Other 25%”

27. The aforesaid tariff has come into effect  

on 23.07.1996.  

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28. In  this  connection  we  may  refer  to  

Notification No.50/90-CE dated 20.03.1990. From the  

aforesaid Notifications it would appear that the  

total  exemption  was  granted  in  respect  of  jute  

blankets, jute felt, jute mats and mattings, jute  

carpets and bleached, dyed or printed jute fabrics  

falling  under  Chapter  53,  56,  57  or  63  of  the  

Schedule  to  the  Central  Excise  Tariff  Act,  1985  

with  the  condition  that  exemption  shall  not  be  

available if the jute content is less than 50% in  

the aforesaid commodities.  

29. Later on by a subsequent Notification No.  

93/94-CE  dated  25.4.1994,  the  said  50%  has  been  

lowered  to  30%.  By  a  subsequent  Notification  

No.29/95-CE dated 16.03.1995, total exemption was  

granted in respect of floor coverings of jute.

30. On  a  conjoint  reading  of  the  aforesaid  

Tariff and the exemption Notifications issued by  

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the Government, the stand of the Revenue cannot be  

sustained.   

31. Apart  from  that  the  revenue’s  stand  in  

this case is contrary to the decision of this Court  

in  HPL Chemicals Ltd. Vs.  Commissioner of Central  Excise, Chandigarh – (2006) 5 SCC 208. Commenting  on  the  reliance  placed  by  the  Revenue  on  the  

residuary item in Heading 38.23 (renumbered 38.24),  

this Court observed that the CEGAT erred in relying  

on the residuary article by reading the residuary  

heading as if it was specific heading. This Court  

observed as under:-

“31. ...In the present case since  the goods were covered by a specific  heading i.e. Heading 25.01, the same  cannot  be  classified  under  the  residuary  heading  at  all.  This  position is clearly laid down in Rule  3(a) of the Interpretative Rules set  out  above.  As  per  the  said  Interpretative Rule 3(a), the heading  which  provides  the  most  specific  description shall be preferred to the  

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heading  providing  a  more  general  description...”

32. In  coming  to  the  said  conclusion,  this  

Court  relied  on  an  earlier  three-Judge  Bench  

decision of this Court in  Dunlop India Ltd. Vs.  Union of India and others – (1976) 2 SCC 241, para  35. In the said paragraph this Court very elegantly  

clarified the position in the following words:-

“35. ...When  an  article  has,  by  all standards, a reasonable claim to  be classified under an enumerated item  in  the  Tariff  Schedule,  it  will  be  against  the  very  principle  of  classification  to  deny  it  the  parentage  and  consign  it  to  an  orphanage of the residuary clause....”

33. That  principle  has  also  been  upheld  by  

another three-Judge Bench decision of this Court in  

M/s Bharat Forge and Press Industries (P) Ltd. Vs.  Collector  of  Central  Excise,  Baroda,  Gujarat –  (1990) 1 SCC 532 (at page 534 para 4):-

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“4. The question before us is whether  the  department  is  right  in  claiming  that  the  items  in  question  are  dutiable under tariff entry 68. This,  as mentioned already, is the residuary  entry and only such goods as cannot be  brought  under  the  various  specific  entries  in  the  tariff  should  be  attempted  to  be  brought  under  the  residuary  entry.  In  other  words,  unless  the  department  can  establish  that the goods in question can by no  conceivable  process  of  reasoning  be  brought under any of the tariff items,  resort cannot be had to the residuary  item....”

34. It  is,  thus,  clear  that  the  aforesaid  

principle has virtually been hardened into a rule  

of law by reason of the consistent view taken by  

this Court.  The Revenue’s stand in this case in  

purporting  to  justify  the  classification  of  the  

goods manufactured by the respondent company under  

a  residuary  heading,  therefore,  cannot  be  

appreciated.  

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35. Learned  Counsel  for  the  Revenue  argued  

that in a case where there is some doubt relating  

to  classification  of  the  goods,  the  essential  

characteristic of the goods will have to be looked  

into.  Relying on this concept of essentiality test  

the learned counsel argued as the exposed surface  

of the carpet is polypropylene fiber and not jute,  

these goods cannot be classified as jute carpets.  

It  was  also  argued  if  these  goods  are  to  be  

classified  as  jute  carpets,  then  the  exposed  

surface of the carpets must be of jute.  

36. This argument is contrary to the principle  

discussed above, namely, the predominance test. It  

is  not  disputed  by  the  Revenue  that  by  the  

predominance test the content of the jute in the  

carpet is highest and more than 50%. Polypropylene  

fiber has also been accepted by the Revenue as a  

textile material falling under Chapter 55.

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37. Therefore, the mere fact that the surface  

of the carpet is polypropylene fiber, it does not  

cease  to  become  jute  carpet.  So  this  Court  is  

constrained  to  hold  that  this  argument  by  the  

Revenue  on  the  basis  of  surface  or  essentiality  

test is erroneous.

38. Learned  counsel  for  the  Revenue  also  

argued  that  the  common  parlance  test  should  be  

applied for classifying the carpets as the carpets  

to  the  common  man  would  not  appear  to  be  jute  

carpet but polypropylene carpet.

39. In  Collector of Central Excise, Hyderabad  Vs.  Fenoplast (P) Ltd. (II) - 1994 (72) ELT 513  (SC), a three-Judge Bench of this Court held that  

while  interpreting  statutes  like  the  Excise  Tax  

Acts or Sales Tax Acts where the primary object is  

to raise revenue and for such purpose the various  

products  and  goods  are  classified,  the  common  

parlance  test  can  be  accepted,  if  any  term  or  

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expression is not properly defined in the Act “if  

any  term  or  expression  has  been  defined  in  the  

enactment then it must be understood in the sense  

in which it is defined but in the absence of any  

definition being given in the enactment the meaning  

of  the  term  in  common  parlance  or  commercial  

parlance has to be adopted”.

40. Going  by  the  aforesaid  principle,  we  

cannot  hold  that  common  parlance  test  has  any  

application here.

41. In laying down this preposition, the Court  

relied upon a decision of this Court in  M/s Indo  International Industries Vs. Commissioner of Sales  Tax, Uttar Pradesh – (1981) 2 SCC 528.

42. Learned  counsel  for  the  Revenue  argued  

that for the purpose of classification in this case  

Rule 3  of the ‘Rules for the Interpretation of the  

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Schedule  to  the  Act’  should  be  applied  and  by  

applying the said Rule the goods manufactured by  

the respondent Company should be covered under the  

heading “others”.

43. This Court is unable to accept the said  

submission for the following reasons.

44. In  order  to  appreciate  the  said  

submission, the said Rule 3 (a) (b) and (c) is  

quoted below:-

“3. (a) The heading which provides the  most  specific  description  shall  be  preferred to headings providing a more  general description. However, when two  or more headings each refer to part  only  of  the  materials  or  substances  contained in mixed or composite goods  or to part only of the items in a set,  those headings are to be regarded as  equally specific in relation to those  goods,  even  if  one  of  them  gives  a  more  complete  or  precise  description  of the goods.

(b)  Mixtures,  composite  goods  consisting  of  different  materials  or  

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made up of different components, and  goods put up in sets, which cannot be  classified by reference to (a), shall  be classified as if they consisted of  the material or component which gives  them  their  essential  character,  insofar  as  this  criterion  is  applicable.  

(c) When goods cannot be classified by  reference to (a) or (b), they shall be  classified  under  the  heading  which  occurs  last  in  the  numerical  order  among  those  which  equally  merit  consideration.”

45. From  a  perusal  of  the  said  Rules  it  

appears  that  the  dominant  intention  in  the  said  

Rule,  especially  clause  (a)  thereof  is  that  the  

heading  which  provides  the  most  specific  

description  shall  be  preferred  to  the  heading  

providing a more general description.  

46. In the case in hand, following the said  

interpretation,  the  goods  manufactured  by  the  

respondent-company  are  to  be  classified  as  jute  

carpet or jute floor coverings.

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47. Clause (b) and Clause(c) of the said Rule  

3 will apply only in those cases which cannot be  

classified under clause (a). Since in the instant  

case  following  the  dominant  intention  of  clause  

(a),  the  goods  manufactured  by  the  respondent-

company can be classified, clause (b) and clause(c)  

of the said Rule need not be pressed into service.

48. Reference in this connection may be made  

to a three-Judge Bench decision of this Court in  

Commissioner of Central Excise, Nagpur Vs. Simplex  Mills Co. Ltd. – (2005) 3 SCC 51. In paragraph 11  of the said report, the purport of the said Rule  

has been discussed. While discussing the said Rule,  

this Court held that the Rule having been framed  

pursuant  to  the  powers  under  Section  2  of  the  

Central  Excise  Tariff  Act,  1985  is  statutory  in  

nature. Learned Judges also made it clear that for  

the purposes of classification primacy should be  

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attached  to  the  section  and  chapter  notes  along  

with terms of the headings. If on application of  

Section  and  Chapter  Notes,  ‘no  clear  picture  

emerges’ then only can one resort to those rules.

49. In  the  instant  case  from  the  above  

discussion,  it  is  clear  from  a  perusal  of  the  

Chapter  and  Section  Note,  that  the  goods  

manufactured  by  the  respondent-company  can  be  

classified  as  jute  carpets/jute  floor  coverings.  

Thus, the argument on behalf of the Revenue cannot  

be accepted.  

50. Apart from that, the point on Rule 3 which  

has  been  argued  by  the  learned  counsel  for  the  

Revenue was not part of its case in the show-cause  

notice.  It  is  well  settled  that  unless  the  

foundation of the case is made out in the show-

cause notice, Revenue cannot in Court argue a case  

not  made  out  in  its  show-cause  notice.  {See:  

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Commissioner  of  Customs,  Mumbai Vs.  Toyo  Engineering  India  Limited  –  (2006)  7  SCC  592,  para 16}.

51. Similar view was expressed by this Court  

in  the  case  of  Commissioner  of  Central  Excise,  Nagpur Vs. Ballarpur Industries Ltd. – (2007) 8 SCC  89. In paragraph 27 of the said report, learned  

Judges made it clear that if there is no invocation  

of the concerned rules in the show-cause notice, it  

would not be open to the Commissioner to invoke the  

said Rule.

52. Learned  counsel  for  the  Revenue  also  

relied on some judgments.  

53. It relied on the case of Oswal Agro Mills  Ltd. and Ors. Vs. Collector of Central Excise and  Ors. – 1993 Supp. (3) SCC 716.  In that case the  Court allowed the appeal filed by the assessee and  

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did not accept the interpretation of the Revenue on  

‘Toilet Soap’. Learned judges relied on the age old  

principle that where the words of the statute are  

plain and clear, there is no room for applying any  

of the canons of interpretation which are merely  

presumption in cases of ambiguity in the statute.

54. Applying the said principle in the present  

case, we hold that the ratio in Oswal Agro (supra)  does not at all advance the case of the Revenue.  

Apart  from  that  the  said  decision  was  rendered  

under the old Tariff Act when there was nothing  

like Chapter Note and Section Note.  Oswal Agro  (supra) has no application here.

55. Learned  counsel  relied  also  on  the  

decision  of  this  Court  in  Novopan  India  Ltd,  Hyderabad Vs.  Collector   of  Central  Excise  and  Customs, Hyderabad – 1994 Supp. (3) SCC 606. In  that case, the Court interpreted the provision of  

Old Tariff Act with regard to exemption and held in  

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paragraph 16 that a person invoking an exemption  

provision must establish clearly that he is covered  

by  the  said  provision.  In  case  of  doubt  or  

ambiguity,  the  benefit  of  exemption  cannot  be  

claimed by the assessee.

56. In the present case, those questions are  

not at all relevant as we are concerned with the  

provisions of the new Central Excise Act of 1985  

which  came  into  force  on  22.2.1986  with  Section  

Notes,  Chapter  Notes,  Headings  and  sub-headings.  

Therefore,  the  ratio  in  Novopan (supra)  has  no  relevance in the facts of the present case.

57. Learned  counsel  also  relied  on  the  

decision  of  this  Court  in  Hindustan  Poles  Corporation Vs.  Commissioner  of  Cental  Excise,  Calcutta – (2006) 4 SCC 85. In fact the judgment in  that case does not at all advance the case of the  

respondent. In paragraph 39 of the judgment it has  

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been held that the residuary entry is meant only  

for those categories of goods which clearly fall  

outside the ambit of specified entries and unless  

the  Department  can  establish  that  the  goods  in  

question  can,  by  no  conceivable  process  of  

reasoning,  be  brought  under  any  of  the  tariff  

items, resort cannot be had to the residuary item.

58. Following the said principle, as we must,  

in the instant case, the goods manufactured by the  

respondent-company fall clearly under the specified  

items as discussed above.  

59. Revenue also relied on another decision of  

this Court in Kemrock Industries & Exports Ltd. Vs.  Commissioner of Central Excise, Vadodara – (2007) 9  SCC 52, for the purpose of essentiality test.  As  

noted  above,  there  is  no  whisper  of  the  

essentiality test in the show-cause notice. As no  

case of essentiality test has been made out in the  

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show-cause notice, the same cannot be argued for  

the  first  time  before  this  Court.  As  such  the  

judgment in Kemrock (supra) on essentiality test is  of no avail.

60. For the reasons aforesaid and in view of  

the  consistent  finding  on  fact  and  law  by  the  

Commissioner (Appeals) and the Tribunal, this Court  

does not find any reason to upset such concurrent  

findings which are neither perverse nor can they be  

said to be based on no evidence. Therefore, the  

appeals filed by the Revenue are dismissed as being  

devoid of merit. In the facts and circumstances of  

this case, there will be no order as to costs.  

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

.......................J. New Delhi (ASOK KUMAR GANGULY)

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September 8, 2009

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