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PETITIONER: THE COLLECTOR OF CENTRAL EXCISE, BARODA

       Vs.

RESPONDENT: M/S. THE GAEKWAR MILLS LIMITED

DATE OF JUDGMENT:       11/10/1996

BENCH: S.P. BHARUCHA, SUHAS C. SEN

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T      SEN, J.      This 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. Polyester 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.      Relevant extracts  from the  aforesaid Tariff Items are given below:-      " Item No. 19, Cotton Fabrics.      "Cotton    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:      Explanation II:-  Where two or more      of the following fibres, that is to      say,      (a) man-made  fibre  of  cellulosic      origin

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    (b) cotton      (c) wool      (d) silk (including silk noil)      (e)  jute  (including  Bimilipatnam      jute or mesta fibre)      (f)   man-made    fibre   of   non-      cellulosic origin      (g) flax      (h) 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      Item.      Item No.22 Man-Made Fabrics.      "Man-made   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:      Provided  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.      Explanation  III:-  Explanation  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

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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.      It was  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.      There 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.      It was  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.      On 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. It was  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

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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. Because 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.      The 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.      In 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.