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international Conveyors Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC1093DTri(Delhi)
Appellantinternational Conveyors Ltd.
RespondentCollector of Central Excise
Excerpt:
1. m/s international conveyors limited, a public limited company, in short mentioned as the company, filed a revision application (r.a.) before the additional secretary, government of india, department of revenue on 10th of april 1981 against the order no. v-2(68)/688/79/8620 dated 23rd of october 1980 passed by the collector of central excise (appeals) bombay. the related order of adjudication was of the superintendent of central excise, aurangabad dated 21st/24th of march 1979. the said r.a. came to be transferred to the tribunal under section 35-p of the central excises and salt act, 1944 hereinafter referred as the act, as an appeal, and is being accordingly disposed of as such. "p.v.c. fire resistant anti-static solid woven coal conveyor belting/p.v.c. food conveyor belting." 3......
Judgment:
1. M/s International Conveyors Limited, a Public Limited Company, in short mentioned as the Company, filed a Revision Application (R.A.) before the Additional Secretary, Government of India, Department of Revenue on 10th of April 1981 against the Order No. V-2(68)/688/79/8620 dated 23rd of October 1980 passed by the Collector of Central Excise (Appeals) Bombay. The related Order of Adjudication was of the Superintendent of Central Excise, Aurangabad dated 21st/24th of March 1979. The said R.A. came to be transferred to the Tribunal under Section 35-P of the Central Excises and Salt Act, 1944 hereinafter referred as the Act, as an Appeal, and is being accordingly disposed of as such.

"P.V.C. Fire Resistant Anti-Static Solid Woven Coal Conveyor Belting/P.V.C. Food Conveyor Belting." 3. While submitting the AL-4, the Company claimed that its products fell under Tariff Item 68 of the C.E.T.4. On 24th October 1978, the Company was required to explain the manufacturing process and raw material to be used. Necessarily, reply was filed on 19th November 1978.

5. A show cause notice was issued on 12th of January 1979 calling upon the Company as to why its product should not be licensed under Tariff Item No. 19. The Company resisted the show cause notice and made several-fold submissions which are summarised as below :- (ii) The mode of manufacture or the ingredients thereof could not be solely determinative of the exigibility to levy of duty on a given product; (iii) The contents of a tariff entry must be understood in its trade or market sense ; (iv) The Explanation II to Tariff Item No. 19 on which reliance was sought to be placed by the Excise Authorities to reject the Company's classification had no relevance or application as it related to products which could be termed as fabrics ; (v) The Notification No. 273/77-C.E., dated 11th of August 1977 could not play any role to bring the Company's products in the ambit of Tariff Item No. 19 of C.E.T.6. The Superintendent, Central Excise, however, rejected all the contentions and held that the manufacturing process of the base belting was not different from the fabrics.

7. Frankly speaking, we have not been able to appreciate the reasoning of his Order that what was important was not the entire manufacturing process but the base process. Further, by holding that cotton was predominating in weight, the product (Conveyor Belting) which was used entirely for coal mining operation by the Coal India Limited was held to be excisable under Tariff Item No. 19 (III). At this stage, it may be expedient to bring in focus the Tariff Item No. 19 with its Explanations etc., as follows :- 8. The Company filed an appeal before Appellate Collector of Central Excise, Bombay and in terms stated in Para 3(e) that alongwith the application for L-4 Licence, it had enclosed detailed plans indicating that its products which were PVC Conveyor Belting would be excisable under Tariff Entry 68. It was stated that rubber belts would be covered under 16A of the C.E.T.9. The Company also stated in their Appeal Memo to the Appellate Collector, a copy of which has been submitted to us, that the basis of the Adjudication Order, of the Superintendent, was that since in the making of PVC Conveyor Belting the Company would be consuming cotton fabrics, it tantamounted to process akin to textile industry. The assessee rebutted the said basis by pleading that in construing a tariff item one has to look at the trade and commercial sense of the entry. That conveyor belting is a product which is, and has always been, known to the market and that is how its specific mention comes in Entry No. 16A. At this stage, Entry 16A may also be brought in focus as follows : - 10. The submissions, however, did not find favour with the Appellate Collector and not only he rejected the Appeal but held that the appellant was not certain whether its product was classifiable under Item 16A or 68. He also recorded in Para 1 of his Order the content ions which had been raised before the Assistant Collector on behalf of the Company and which were reiterated before him. In addition, he recorded the Company's averment that in the Collectorate of Central Excise, Calcutta, the identical product manufactured by its sister concern, M/s Multiple Fabrics Private Limited was being excised under Tariff Item No. 68.

11. We like to reproduce Para 2 of the Appellate Collector's Order to show that though he opined that the Company was not certain about its classification he does not project as to from where he got that impression : - Para 2 : I have carefully gone through the case records, submissions contained in the appeal memorandum and those made at the time of personal hearing. At the outset, I must state that according to the appellants they are not certain whether the product is classifiable under Item No. 16A or whether the product is classifiable under 68.

Tariff Item No. 19 under which the Superintendent has classified the product is for cotton fabrics including those impregnated, coated or laminated with preparations of artificial plastic materials.

According to the tariff description of the entry, this item would include the all varieties of fabrics manufactured either wholly or partly from cotton. And, according to Fairchild's Dictionary of Textiles, 'Fabric' means a cloth that is woven or knit, braided, netted, with any textile fibre, or is a bounded web". Even in the case of Porritts and Spencer (Asia) Ltd. (Cencus. 80 397D) where the petitioners manufactured drier belts on power looms from cotton and woollen yarn, the Supreme Court held that the drier belts are textiles, even viewed in the context of common parlance test The term 'textile' includes fabrics ; Further, according to the Dictionary cited above, belting is a woven knitted or braided fabric. In the manufacture of the product under consideration looms with lower count of cotton or cotton yarn are used for weaving of these belts as in the case of any other fabric and cotton is predominant in weight.

These are the facts mentioned in the impugned order and not refuted by the appellants. Belting cloth, however, is called by the appellants as carcass to which PVC is impregnated. Considering the Supreme Court's judgment cited above, definitions of the terms "Textiles, fabrics" and "belting" given in the Fairchild's Dictionary of Textiles and the manufacturing process deployed by the appellants, there is no doubt that belting is a fabric. And, since cotton is predominant, it must fall under T.I. No. 19. Since in this item there is a specific Sub-item III to include cotton fabrics impregnated, the product in question must pay duty under T.I. No. 19 III. Tariff description of Item No. 16A is of no relevance to the appellants as that relates to rubber products. Duty under T.I. No. 68 is attracted only if there is no other specific item in the product that is to say if the product is not excisable under any other item from 1 to 67. In the present case, P.V.C. Fire Resistant Anti-Static solid woven coal conveyors Belting is excisable under Item No. 19 as discussed above, item No. 68 is not attracted. The appellants have mentioned that in the Collectorate of Central Excise Calcutta an identical product is assessed duty under item No. 68. I am not aware of the basis for the classification made under that Collectorate nor is it necessary for me. As on merits, the product is liable to duty under T.I. No. 19 III. Accordingly, I do not see any justification to interfere with the impugned order. The appeal is rejected." 12. We have reproduced Tariff Item 19 with a purpose to show that, in the first place, to hold a fabric as a cotton fabric, predominance in weight is the primary test. To begin with, the first essential is that 40 per cent of the fabric should contain cotton by weight and 50 per cent or more by weight of non-cellulosic fibres or yarn or both in the end-product. The primary requirement under Tariff Item No. 19 is not waived or diluted under any sub-heads. To bring an item under sub-head III, it is necessary that goods must come within the ambit of cotton fabrics as defined in the main Head.

13. It must be clarified here that it is not the Revenue's case that the duty was sought to be levied and levied on base fabrics. It is an accepted position that the end product, which are conveyor beltings, were valued and subjected to excise under Tariff Item No. 19 III which, in view of definition of cotton fabrics, seems highly imaginative attitude.

14. From Para 2 of the Appellate Collector's Order reproduced above, we notice that the burden or weight of his decision has been/the Supreme Court Judgment in the case of Porritts & Spencers cited as AIR 1979 SC 300. Apparently, his decision resulted from the confusion of his reading in the said Judgment "Felts" as "Belts". In Spencer's case supra, a Full Bench constituted of three Judges held that cotton and woollen dryer felts which are woven textile felts of a kind commonly used in paper making machinery, are textile fabrics and they are, therefore, textile within the meaning of that expression. That case was under the Sales Tax and it was held that in view of the expression of Item 30 of Schedule B of the Punjab General Sales Tax Act, the dryer felts were exempt from sales tax. It was further held that in the absence of any definition of textile, it must be interpreted according to its public sense, meaning "that sense which people conversant with the subject matter with which the statute is dealing would attribute to it". Their Lordships also noticed that the word textile is derived from the Latin texere which means, to weave and it means any woven fabric.

15. We fail to understand as to how the said Judgment could be relied upon by the Collector to reject the assessee's Appeal. The Judgment on the other hand comes to the petitioners' rescue, because a very important principle has been laid down therein that in a taxing statute words of everyday use must be construed not in their scientific or technical sense but as understood in common parlance. In the Spencers' case (supra), felts were made wholly of yarn, may be cotton yarn or woollen yarn, and sometimes blended with polyester yarn, but the raw material was only yarn and nothing else.

16. It shall be in the fitness of things if Paras 3, 4 and 5 of the cited Supreme Court Judgment are reproduced, because it shall have the effect to a appellant's favour and would also establish that if the Collector of Appeals had not understood Felt as Belt, he would not have come to the decision against the appellant : - 3. Now, the word 'textiles' is not defined in the Act, but it is well settled as a result of several decisions of this Court, of which we may mention only a few, namely, Ramavatar Budhaiprasad v. Asstt. Sales Tax Officer, Akola, AIR 1961 SC 1325 and M/s Motipur Jamindary Co. Ltd. v. State of Bihar, AIR 1962 SC 660 and Stale of West Bengal v. Washi Ahmed, (1977) 3 SCR 149 ; (AIR 1977 SC 1638) that in a taxing statute words of everyday use must be construed not. in their scientific or technical sense but as understood in common parlance. The question which arose in Ramavatar's case (supra) was whether betel leaves are vegetables and this Court held that they are not included within that term, This Court quoted with approval the following passage from the judgment of the High Court of Madhya Pradesh in Madhya Pradesh Pan Merchants' Association, Santra Market, Nagpur v. State of Madhya Pradesh -1 STC 99 at p. 102 : (AIR 1956 Nag 54 at p. 55) : "In our opinion, the word "vegetables" cannot be given the comprehensive meaning the term bears in natural history and has not been given that meaning in taxing statutes before. The term "vegetables" is to be understood as commonly understood denoting those classes of vegetable matter which are grown in kitchen gardens and are used for the table" and observed that "the word Vegetables' in taxing statutes is to be understood as in common parlance i.e.

denoting class of vegetables which are grown in a kitchen garden or in a farm and are used for the table". This meaning of the word 'vegetables' was reiterated in M/s Motipur Jamindary case where sugarcane was held not to fall within the definition of the word 'vegetables' and the same meaning was given to the word 'vegetables' in Washi Ahmed's case (supra) where green ginger was held to be 'vegetables' within the meaning of that word as used in common parlance.

"4. It was pointed out by this Court in Washi Ahmed's case (supra) that the same principle of construction in relation to words used in a taxing statute has also been adopted in English, Canadian and American Courts. Pollock, J. pointed out in Grenfell v. LR.C. (1876) 1 Ex. D. 242 at p. 248 that "if a statute contains language which is capable of being construed in a popular sense, such a statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning, of course, by the words "popular sense" that which people conversant with the subject-matter with which the statute is dealing would attribute to it." So also the Supreme Court of Canada said in Planters Nut and Chocolate Co. Ltd. v. The King (1952) 1 DLR 385 while interpreting the words "fruits" and 'vegetables' in the Excise Act. "They are ordinary words in everyday use and are, therefore, to be construed according to their popular sense". The same rule was expressed in slightly different language by Story, J., in Two Hundred Chests of Tea (1824) 9 Wheaton 430 at 438 (U.S.) where the learned Judge said that "the particular words used by the Legislature in the denomination of articles are to be understood according to the common commercial understanding of the terms used, and not in their scientific or technical sense, for the Legislature does "not suppose our merchants to be naturalists, or geologists, or botanists." 5. There can, therefore, be no doubt that the word 'textiles' in Item 30 of Schedule, 'B' must be interpreted according to its popular sense, meaning "that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it." There we are in complete agreement with the Judges who held in favour of the Revenue and against the assessee. But the question is : What result does the application of this test yield. Are 'dryer felts' not 'textiles' within the ordinary accepted meaning of that word. The word 'textiles' is derived from the Latin 'texere' which means 'to weave' and it means any woven fabric. When yarn, whether cotton, silk, woollen, rayon, nylon or of any other description or made out of any other material is woven into a fabric, what comes into being is a 'textile' and it is known as such. It may be cotton textile, silk textile, woollen textile, rayon textile, nylon textile or any other kind of textile. The method of weaving adopted may be the warp and woof pattern as is generally the case in most of the textiles, or it may be any other process or technique. There is such phenomenal advance in science and technology, so wondrous is the variety of fabrics manufactured from materials hitherto unknown or unthought of and so many are the new techniques invented for making fabric out of yam that it would be most unwise to confine the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed, woven fabric would be 'textiles'. What is necessary is no more than weaving of yarn and weaving would mean binding or putting together by some process so as to form a fabric.

Moreover a textile need not be of any particular size or strength or weight. It may be in small pieces or in big rolls ; it may be weak or strong, light or heavy, bleached or dyed, according to the requirement of the purchaser. The use to which it may be put is also immaterial and does not bear on its character as a textile. It may be used for making wearing apparel, or it may be used as a covering or bedsheet or it may be used as tapestry or upholstery or as duster for cleaning or as towel for drying the body. A textile may have diverse uses and it is not the use which determines its character as textile. It is, therefore, no argument against the assessee that 'dryer felts' are used only as absorbents of moisture in the process of manufacture in a paper manufacturing unit. That cannot militate against 'dryer felts', falling within the category of 'textiles', if otherwise they satisfy the description of 'textiles'.

17. In the revision application filed on 6-4-1981 the Company made a short submission that PVC Coal Conveyor Belting was not known in trade or commercial sense as cotton fabric and their classification under Tariff Entry No. 19 III was wholly unjustifiable and wrong.

18. On 15th of March 1982, the Company submitted a communication to the Additional Secretary, Ministry of Finance, Government of India and we like to notice the same to project that the revisionary authority heard the matter on 15th of March 1982 and required the appellant to file a note on the process of manufacture and the other components of the product:- Under your Ref. No. 195/D/19/240-81-Cx, the revision application against Order in appeal No. V2 (68)/688/79/862 dated October 23, 1980, passed by the Appellate Collector, Central Excise, Bombay, was heard by the Revisional Authority today, the March 15, 1982, and we are pleased to enclose a note setting out the process of manufacture, and the components of cotton by way of weight as well as cost to the end product. As was stated at the time of hearing, the other two manufacturers of the identical product PVC conveyor belting, i.e. Dunlop India and Fenner India, are clearing the goods under Tariff entry 68. A photo copy of the specimen of the Gate Pass of Dunlop India is enclosed. We are also enclosing herewith a sample of PVC conveyor belting : Process of Manufacture: Twisted cotton yarn purchased from various manufacturers who pay excise duty under tariff entry 18A on such yarn, is dipped and soaked in liquid pvc mix.

"Such twisted yarn dipped, soaked and saturated with liquid pvc mix or solution is thereafter made into carcass, which is straightaway fed into gelling plant.

Thereafter the gelled pvc carcass is straightaway fed into a coating plant where again further coating of pvc liquid takes place.

At our plant, unlike Dunlop India's case, carcass is not bought from open market. The manufacturing of the carcass with pvc soaked cotton yarn takes place at the first stage of manufacturing of our product.

In one square meter of pvc conveyor belting (Approxi. weight 10 kg.), the components of pvc mix is 6kg. and cotton is 2.1 kg., i.e.

60% and 21% respectively. The balance components are other materials.

The raw material cost of 1 sq mtr, of pvc belting is about Rs. 400/-. Component cost of pvc and cotton are as under : - pvc mix ...

Rs. 205/- i.e. 51% and 10% respectively of total cost. The balance cost is of other materials.

19. On April 22, 1982, the Company submitted a letter again enquiring as to what had happened to the hearing and what action had been taken on its letter of March 2', 1982, asking for a stay of recovery of differential duty, and that they had not been communicated any order even after a month of hearing. A copy of the said letter has been given to us and is Annexure P1 of Paper Book II, pages 5 and 6.

20. On 8th of July 1982, the Company filed a Writ Petition before the Hon'ble High Court, Delhi under Article 226 of the Constitution of India wherein the prayer made was that the Additional Secretary, Ministry of Finance be directed to give effect to the benefit of his decision handed out in another case, namely, Dunlop India's case, involving identical facts and circumstances, that PVC Conveyor Belting could not be said to be cotton fabric, excisable under Tariff Item 19, but was dutiable under Tariff Entry 68 of the Central Excises and Salt Act, 1944. We have been given a copy of the Central Government Order dated 28th October 1980 in Dunlop India's case. To set at rest any doubt if one can entertain one, that the facts in Dunlop's case as also the product were identical with that of the Petitioner in the present case, we reproduce Paras 2 and 3 of the said Order which was passed by a Division Bench consisting of an Additional Secretary and a Joint Secretary : - "The facts of the case are that the petitioners manufacture PVC conveyor beltings. They buy duty paid fabrics for this purpose which are specially suited for the manufacture of belting. These fabrics in different plies after being dipped into PVC solution and after being given a thicker coating of PVC on the two outer sides are subsequently fused and made into conveyor belting. The petitioners contend that they supply the conveyor belts in running lengths to the various users e.g. coal mines and that their conveyor beltings are manufactured to ISS as well as NCB specification by using special type of material so as to make the product fire-proof and fire-resistant. It was also pointed out at the time of personal hearing that the product contained only 18-19% of cotton in the total weight of the product. The cost component of cotton in the p.v.c. conveyor belting was only in the neighbourhood of 12%. The petitioners commence manufacture of p.v.c. conveyor belting in 1965-66 and for a number of years they cleared their goods when their factory was working under the system of physical control of the Central Excise authorities. Initially, their goods were not charged to duty by the lower authorities by treating the impugned goods as articles of plastic and given them the benefit of exemption notification No. 68/71. However, sometime in 1975, a show cause notice was issued to the petitioners asking them why their goods should not be classified as cotton fabrics under item 19 (iii) which was inserted in the Central Excise Tariff in 1969 and despite the petitioners' protestations that the goods cannot be considered as cotton fabrics, the lower authorities decided to classify them under item 19 (iii) Central Excise Tariff and accordingly confirmed the demand for differential duties for the various periods commencing from the year onwards. The orders of the Assistant Collector in this behalf were confirmed in appeal by the Appellate Collectors and hence revision applications. The petitioners contend that the product was known to the trade as conveyor belting and going by the test of commercial parlance it could by no stretch of imagination be considered as fabrics within the meaning of Item 19(iii). They relied not only on the test of commercial parlance laid down by Supreme Court for purposes of classification in such cases but also referred to the judgment of the Hon'ble High Court of Gujarat at Ahmedabad in the case of M/s Hind Engg. Co. Rajkot in a sales-tax case where the Court ruled out the classification of the goods as cotton fabrics. The petitioners also assailed the demands in question on the time-bar by believing that neither Rule 9(2) nor Rule 10A was applicable to the circumstances of the case because they had cleared the goods with the knowledge of the Central Excise Authorities and not clandestinely and, therefore, it was Rule 10 of the Central Excise Rules which alone could be applied to their case and if so the demands must be held as time-barred.

3. Government see considerable force in the petitioners' contention on the merits of the case, namely, that the goods which are not marketed as 'cotton fabrics' and which are not marketed as cotton fabrics in commercial parlance did not attract levy of duty under Item 19 of the Central Excise Tariff. Govt. also agree with the petitioners that even if one went by the extended meaning of cotton fabric the end product namely P.V.C. belting which is produced by fusion of various layers with fabrics dipped in a special type of solution, lost its identity as a cotton fabric and, therefore, cannot be said to fall within the meaning of the expression of 'cotton fabrics' under Item 19 (Hi) of the Central Excise Tariff." 21. Before proceeding further, we may mention that there might be initial justification for not accepting the Company's classification as in Dunlop's case also identical goods were being classified under Item 19(iii) of C.E.T. but the Appellate Collector's Order dated 23rd October 1980 is not based on any proper reasonings. In any case, after the Government of India's Judgment dated 28th of October 1980 in Dunlop's case, portion of which has been reproduced in Para 10 above, we find no justifiable reasons for the reluctance of the Government in not accepting the Company's revision petition. As a fact, we find that though the revision application was received on 10th April 1981 the same Additional Secretary to the Government of India who had passed judgment in Dunlop's ease sitting with a Joint Secretary, made a note reading as follows t "Ratio of decision taken in Dunlop India's Cal. case could be applied and the R.A. allowed." 22. The above note is on the covering letter of the revision application and we have satisfied ourselves regarding its authenticity.

23. Along with the Writ Petition, a copy of which has been given to us, and in which the Company stated the history and the facts supported by an affidavit, the appellant filed among others the following documents ; - 1. The Order of the Superintendent of Central Excise, Aurangabad dated 21st/24th March 1979, which is the basic Adjudication Order.

2. Order dated 23rd October 1980 passed by the Collector of Central Excise (Appeals) Bombay.

3. Order dated 28th October 1980 passed by the Central Government (Order No. 1169 to 1171 of 1980) in the case of Dunlops India Limited, Calcutta.

4. Tariff Advice No. 68/80, dated 3rd of November 1980 issued on 6th of December 1980 by the Central Board of Excise and Customs, advising the public as follows : - "It is considered that Plastic coated (PVC) conveyor beltings could be correctly classified under Item 68 of C. Excise Tariff." 5. A copy of show cause notice dated 14th of May 1981 issued to the assessee by the Superintendent, Central Excise, Aurangabad.

6. Four Orders of the Asstt. Collector of Customs and Excise, Aurangabad, passed in December 1981, one Order passed in January 1982 and another Order passed in February 1982.

24. The Company stated in detail before the Hon'ble High Court in the Writ Petition as to how it obtained the Licence L-4, the details of the show cause notice, the Order of Adjudication passed, the plea taken before the Appellate Collector and the Order passed in the first Appeal as also details of having filed revision application before the Central Government, and having submitted process of manufacture and other details as required by the revisionary authority and further that in Dunlops case the Government had taken a decision on 28th of October 1980 classifying the like goods manufactured by the Company as excisable under Tariff Item 68. It was also stated in the Writ Petition that trade advice of November 1980 was issued on 6th December 1980, which we have quoted, after Central Government's Dunlop's case Order, by the Central Board of Excise and Customs.

25. The Hon'ble High Court,, on the Writ being filed, issued directions to the Central Government to dispose of the Company's revision petition. Compliance was fixed for July 16, 1982. On July 16, 1982, the High Court passed fresh orders that no answer to the show cause notice had been filed despite opportunity given, but the Hon'ble Chief Justice gave another opportunity, which was stated to be last opportunity, to the Government to show cause by 10th of September 1982. A copy of the Order dated July 16, 1982 has been submitted before us.

26. Since the Government did not file any reply, a Division Bench of the Hon'ble High Court consisting of Hon'ble Chief Justice and Hon'ble Justice B.N. Kirpal passed fresh orders on 14th September 1982 as to why directions had not been complied with, time given was upto 13th of October 1982. There being no reply from the Government even upto 13th of October 1982, their Lordships passed order on 13th October 1982 which we would like to reproduce below : - Mr. Wadhwa has filed an affidavit sworn by Mr. Mehta, Ministry of Revenue. On reading the affidavit it is found that Mr. Mehta cannot be personally held responsible for not disposing of the revision petition filed to the Central Government before 14-9-82. We must, however, observe that It is regretable that directions of the courts can be nullified on account of gross inefficiency and redtapism. It seems not only the Department of Revenue was at fault but the litigation section of the Ministry of Law is also to share the blame to a considerable extent. We expect appropriate action to be taken by departmental authorities against the officers/officials, who have shown such laxity. We should also expect the Central Government Standing Counsel to bring to the notice of this Court what action has been taken. However, in the circumstances of the case, we discharge the notice to respondent No. 1 which we had issued on September 1, 1982.

Inasmuch as by an amendment of the relevant laws in this regard, the Excise, Customs and Gold (Control) Appellate Tribunal has come into existence w.e.f. 11-10-82 and revision petitions filed before the Central Govt. will now be treated as second appeals to be disposed of by the said Tribunal, and also because the said revision petitions filed by the petitioners before the Central Govt. would stand transferred to the said Tribunal, we are of the view that an alternative and effective judicial remedy is now available to the petitioners to agitate all the points that have been urged in the present petition. That remedy in fact stands availed of by him inasmuch as the revision petition now stands converted into second appeal before the Judicial Tribunal. We are given to understand that this Tribunal will decide all the pending matters most expeditiously and we hope that the Petitioners' Petition will also be decided as an appeal expeditiously.

The Tribunal has also the power to grant stay or any other interim reliefs. Therefore, in our view, the present petition really cannot proceed. We recall the rule issued by us. We are further persuaded to recall the rule because against the decision of Tribunal under the new law an appeal would "lie directly to the Supreme Court and only on some special matter a reference may be made either to the Supreme Court or to the High Court. The petition is dismissed.

Interim orders stand vacated. No costs.

27. Relevant facts of the case we have already given and need not be repeated. When we observe this, we are in particular referring to the proceedings before the Revisionary Authority on 15th of March 1982 as also the fact that the Company had informed the Government and had also categorically stated before the Hon'ble High Court in the writ petition that the like goods manufactured by other Companies all over the country were being classified under Tariff Item No. 68.

28. The averment in the writ petition runs into 18 pages and the grounds and relief sought is on another 10 pages.

29. Shri Banerjee, Advocate for the appellants, framed four propositions on the given set of facts t - (a) That PVC Coal Conveyor Belting is not and could not be termed as fabric, much less cotton fabric.

(b) Assuming that it is so, and which was clearly stated as an alternative contention, opening part of tariff item 19 (cotton predominance) should be the test.

(c) The word "belting" or the word "belt" is not unknown to the public and the Govt. as these words find place in tariff item 16A and therefore the omission of these words in tariff item 19 makes all the difference.

(d) Explanation II to Entry 19 would apply where two or more fibres named therein would go to the manufacture of the end-product and the Explanation could not be read in isolation of the main Item 19.

He referred to several authorities for his submission that what is known to the market should be the test to classify a product without involving technical niceties.

30. The learned Advocate then referred to the Supreme Court Judgment in the case of Union of India and Ors. v. Gujarat Woollen Felt Mills cited as AIR 1977 SC 1548 for the proposition that in interpreting items in statutes like the Central Excises and Salt Act, 1944, resort should be had not to the scientific or the technical meaning of such terms but to their public meaning or the meaning attached to them by those dealing in them. The Hon'ble Supreme Court in this connection referred to and relied on its earlier Judgment in the case of Commissioner of Sales Tax Madhya Pradesh Indore v. M/s Jaswant Singh Charan Singh cited as AIR (1967) SC 1454. The rule is unexceptional except to the extent that a contrary intention should not be clearly projected from the statute itself. Next, our attention was invited to the Supreme Court Judgment in M/s Indo International Industries reported as AIR 1981, SC 1079 in which it has been held that in commercial sense, glassware will never comprise articles like clinical syringes, thermometers, lactometers and the like which have specialised significance and utility. In this Judgment also reference was made to Jaswant Singh Case (supra) which laid down the law that for classification purposes commercial user is the test and not scientific or technical analysis.

31. Some other arguments of Shri Banerjee must be brought into focus and which are that in Indian Standard Specifications 1980 Edition (October 1980) though felt is considered as textile, but conveyor belt is not mentioned in that category. Further, that the Company was not manufacturing impregnated fabrics or fibre and, therefore, the Revenue cannot rest its case that for determining the classification, constituents of base fibre would be governing factor. He next argued that conveyor belt would be different from V-Belts.

32. Next, Shri Banerjee meticulously read the Notification No.273/77-CE and submitted that if an item is not in the Tariff, a notification could not widen the scope. He referred to the Supreme Court Judgment in this context in the case of Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan and Ors., cited as AIR 1980 SC 1552. We have gone through the Judgment and find that in Para 15, the Hon'ble Supreme Court did lay down the principle that a view taken by the Revenue Board cannot have the effect of resolving a dispute regarding tariff classification. We would have dealt with Shri Banerjee's submission and the Judgment at greater length. but to us the notification though covering conveyor belting of a specification falling under Sub-item (iii) of Item 19 has no relevance to the Company's product. So, we shall be dealing with this aspect a little later.

33. Before we go further, we like to refer to Delhi High Court Judgment on which reliance was sought to be placed by the Revenue Representative. The Judgment was in the case of Porritts & Spencers (Asia) Limited v. Union of India and Anr., cited as 1980 ELT 679. In our opinion, the principle laid down in the said Judgment was the same as in the Supreme Court Judgment in Porritts & Spencers case and product for classification was also the same. Therefore, Revenue cannot draw much strength from this.

34. Next, Shri Banerjee submitted that the crux of the question was what is the manufactured item, intermediate product not being the issue in the present case. He argued that if cotton is not said to be predominant as it is only 21 per cent, and there being no controversion from the Revenue on this score, the question of bringing the Company's product under Tariff Item 19 must be answered against the Revenue.

35. V Emphasising the import of notification No. 273/77-supra, he submitted that there may be conveyor belting in which predominance of cotton fabric could be there and only that particular type could be covered under the notification if product could be considered as falling under Sub-item (iii) of Tariff Item 19. Therefore, the notification should be held to have no relation to those conveyor belting in which predominance of fabrics is not even alleged, predominance of cotton fabrics much less proved.

36. For the Revenue, Shri K.D. Tayal very strongly argued that in view of Explanation II to Tariff Item No. 19, what was material was the base fabric and the constituents of the end-product was immaterial. This argument we reject out of hand as untenable because, when the duty has been levied on the conveyor belting which is the end-product in which non-yarn contents are admitted to be 60 per cent and above, to say that for a classification we should see the embryo is considered as fancy proposition. Shri Tayal also submitted that notwithstanding the Trade Advice as also in spite of Government's Orders in Dunlop's case and the other manufacturers cases, where duties are being levied under Tariff Item No. 68, we should decide the case on merits. This submission of Shri Tayal has been accepted by us and that is how we have involved ourselves with the matter.

37. Shri Tayal then submitted that if tyre cord could be held as fabric, in DCM's case supra, there could be no earthly justification for not holding conveyor belting as cotton fabric. This argument we are also rejecting because the question before us is not as to whether carcass by the Company which was subject to further processing for manufacture of conveyor belting was excisable, but the question is whether conveyor belting as such car be considered as cotton fabrics.

In our considered view, the DCM's case judgment of the Supreme Court is relevant for the purpose in the present case than notification.

38. Shri Tayal next argued that non-exclusion of conveyor belting from Tariff Entry No. 19 makes the belting as inclusive. We do not consider the argument and submission worth taking notice of seriously and, therefore, reject it. We fail to see any reason as to how non-mentioning of conveyor belting in Tariff Item No. 19 will bring it within the scope of Excise under that item itself.

39. Shri Tayal next cited 1973 STC 31 page 115. Shri Banerjee, Advocate, however intervening at this stage submitted that in the cited case though base material was fabric, but in spite of that it was held that rubber belting would come under Tariff Item No. 16A and therefore on the basis of the case cited by the Revenue itself the assessee's Appeal should be allowed.

40. Shri Tayal next contended that I.S. Specification may not necessarily conform to Excise and Tariff Items. In principle, even if we have to accept such arguments, but in the present case reliance was sought to be placed by the Company's Advocate on I.S. Specification to say that when Felt was considered as fabric, and there being no mention anywhere that conveyor belting could be considered as fabric, the onus was on the Revenue to prove the classification sought to be imposed under Tariff Item No. 19.

41. Shri Tayal also submitted that review was sought in Dunlop cases for the subsequent years, but no decision has been taken or could be taken. We have already observed above that the case is not being decided simply by referring to the Dunlop's Judgment.

42. Shri Tayal next drew our attention to the definition of word 'belting' in the new Encyclopaedia of Textiles at page 502. It may be that some belting if falling within the definition of fabric under Tariff Item No. 19 can be considered as textile, but the conveyor belting of the specification being manufactured by the Company must necessarily be held to be outside the purview of T.I.No. 19.

43. Shri Banerjee in rejoinder submitted that the Revenue is charging duty on its base fabrics, i.e. carcasses. He, however, added that that would not be relevant for the present Appeal, the question agitated being the relevance or otherwise of levying duty on the value of conveyor belting being cleared by the Company. On this point, there can be no two views that the question before us is whether conveyor belting as such is excisable under Tariff Item No. 19 and we are not enlarging the dispute as such.

44. The facts we have already stated in detail. Since the Revenue has not controverted the process of manufacture and the constituents of the end-product as given to the revisionary authority on their request, we are accepting the same as factually correct and, therefore, hold that the product of the Company, i.e., conveyor belting, which are used for underground mining operation, presently solely by the Coal India Ltd., consisted of cotton yarn 21%, Polyvinyl Chloride 60% and other ingredients as stated in the note given to the Revisionary authority and which has been reproduced in this Order. We are conscious that use of nylon yarn was accepted, but that would cover other materials constituting of 19% of the final end-product.

45. Before proceeding further, we like to refer to the Gujarat High Court Judgment in the case of Hind Engineering Co., Rajkot (1973 STC 31, Page 115) which is cited by both the parties. We are really surprised that the revenue sought the support from the said case. On the contrary, the Judgment clearly goes in the appellant's favour. In that case, their Lordships were dealing with the question whether rubber beltings manufactured by superimposing rubber or rubber compound on both sides of canvass and used in machineries employed for transmission of power could be termed as cotton fabrics within the meaning of Entry 15 to Schedule A to the Bombay Sales Tax Act, 1959.

Their Lordships noticed that the definition of "cotton fabrics" contained in that Act was as defined vide Item 19 in the First Schedule of the Central Excises Act. It has been further held that even if it is to be assumed that canvass is comprehended within the meaning of 'cotton fabrics', the process of super-imposition of rubber brings about such a basic change in its character, nature and form that it loses its identity and is converted into an altogether different commercial commodity, which cannot be said to fall within the meaning and expression of "cotton fabrics". Like in the Gujarat case when cotton carcass in the appellant's case consisted of only 19% of the end-product-which was conveyor belting used in the mining operation, to accept the Revenue's contention that the end-product could be brought under the Tariff Item 19 as cotton fabrics is not considered worth taking serious notice of.

We should not be understood to say that conveyor belting of all types would be outside the purview of Item No. 19, because in a given case if predominance of cotton fabrics in conveyor belting is there, it may come under the Tariff Item No. 19 because of the Explanation while in the present case it would be hypothetical situation because predominance of fabrics in the Company's products which are excised under T.I. No. 19 is not even alleged, much less proved. The theory propounded by the Revenue that base fabrics would determine the character of the goods was already ruled out as not worthy of any serious consideration.

46. We are accepting the submissions made on behalf of the Company that its product is identical to that of Dunlop. That, however, according to us does not resolve the issue. The decision which we have reached in the present case is that the product of the Company could not be brought within the ambit of Tariff Item No. 19.

47. As for the Notification No. 273/77-C.E., dated 11-8-77, in our view it can simply not be invoked in the appellant's case because of our discussion above. Even otherwise, if a product is not excisable under any Tariff Item, a Notification cannot have the effect of making such product as excisable when it is issued under Powers of Rule 8.

48. We have quoted some portion from the Supreme Court Judgment in Porritts & Spencers case supra and the principle laid therein being unexceptional we hold that conveyor belting manufactured by the appellant admittedly not made primarily of fabrics, can by no stretch of imagination be considered as in the family of "cotton fabrics" as contemplated and provided under Tariff Item No. 19.

49. We consider it necessary to emphasise that it would have been a different matter and different considerations would have been involved if base fabric value only had been excised on the ground that it was a product excisable under T.I. No. 19, but what has been assessed is conveyor belting as such and which item we do not find anywhere in the Tariff Entry.

50. We are also inclined to accept the Company's submission that conveyor belting terminology is known and that is how rubber conveyor belting has been mentioned in T.I. No. 16A. If there was any legislative intention to bring Coal Conveyor Belting under any particular Tariff Item, we see no reason as to why separate entry could not have been provided. Since it is an accepted position that conveyor belting could not be brought under 16A, and since we are holding that Item No. 19 was not attracted and wrongly came to be invoked, we uphold the assessee's offered classification of excisability under Tariff Item No. 68 and allow the Appeal.

51. Before patting with the case, we like to make it clear that if we have not dealt with any particular authority cited at the Bar or argument advanced, it is because the same has not been considered relevant to the issue before us or not worth taking any notice of.

52. Allowing the appeal, we direct the concerned Revenue authorities whether it be the Assistant Collector or the Collector of Central Excise to give effect to this Order and allow consequential relief within two months of the receipt of this Order.

53. I have carefully perused the judgment of my learned colleagues on the Bench. For the reasons spelt out hereinafter I have to differ from their conclusion.

54. It is necessary, for a proper understanding of the matter, to consider the process of manufacture of PVC conveyor belting, which is the subject matter of the present dispute. The process, as described by the appellants before the Revisional Authorities has been set out in para 10 of my colleagues' order. The following paras are extracted from the Writ Petition filed before the Hon'ble Delhi High Court by the appellants ; - "There are three stages of manufacture giving rise to the end-product, pvc conveyor belting. At the first stage of manufacture, the industrial yarn (both cotton and nylon) is twisted and beamed and then the same is conveyed to the carcass making machine wherein such industrial yarn is dipped and soaked in liquid pvc mix and then converted into carcass. This carcass, which is saturated with pvc, is then fed into the next stage of manufacture, spoon ring plant where the pvc saturated carcass undergoes gelling at a temperature of 160C. The process of gelling in the spoonering plant is carried out to ensure liquid pvc setting in the carcass.

Until pvc saturated carcass is gelled in the spoonering plant, the same is not known in the market as carcass. After pvc saturated carcass is gelled, the same goes to the next stage of manufacture, namely, coating plant wherein the gelled pvc saturated carcass passes through the coating chamber which is 18' to 20' high with temperature at 160C. Only when the gelled pvc saturated carcass comes out of the coating chamber, the product is known as conveyor belting and the process of manufacture comes to an end." 55. We have now to consider whether the decision of the lower authorities classifying the subject goods under Item No. 19 III of the 1st Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as CET) was correct and proper. The text of the entire Item 19 relating to cotton fabrics has been reproduced in extenso in para 7 of the judgment of my colleagues. On a close reading of the tariff nomenclature, certain things emerge which are relevant for our present purpose (i) A fabric to be termed "cotton fabric" within the meaning of Item No. 19 CET, one or the other of 2 basic requirements must be complied with, namely, (ii) such fabric should contain more than 40% by weight of cotton and 50% or more by weight of non-cellulose fibre or yarn or both.

(ii) In the case of cotton fabric, impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials, the 2 requirements referred to above, namely, predominance of cotton or relative percentages of cotton and non-cellulosic fibre or yarn, shall be in relation to the base fabrics which are impregnated, coated or laminated, as the case may be. Explanation I defines "base fabrics" as fabrics falling under Sub-item I of Item No. 19 CET which are impregnated, coated or laminated with preparations of cellulose derivatives or of other plastic materials.

(iii) Sub-item III, namely, "cotton fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials" is leviable with basic excise duty at a rate which is expressed as "the duty for the time being leviable on the base fabrics, if not already paid, plus 30% ad, val".

56. Against the background outlined in the preceding para, we may now examine the process of manufacture. As explained by the appellants in their averment in the Writ Petition before the Delhi High Court, industrial yarn (both cotton and nylon) is twisted and beamed and the same is conveyed to the carcass making machine wherein such industrial yarn is dipped and soaked in liquid pvc mix and then converted into carcass. In response to a query from the Bench, the learned Counsel for the appellants submitted that there was a process of weaving involved in the preparation or production of the carcass. However, the Counsel contended that the resultant carcass could not be termed as "cotton fabric". Now, Item No. 19 CET takes in its ambit all varieties of cotton fabrics as is clear from the tariff nomenclature, subject, of course, to the predominance or percentage criteria laid down therein.

In deciding the question whether a carcass of the nature referred to would come within the ambit of Item No. 19 CET, the judgement of the Supreme Court in the case of Delhi Cloth and General Mills Co. Ltd. v.State of Rajasthan and Ors. decided on 8-5-1980 [1980 ELT, 383 (SC)] is very relevant. In that case the goods under consideration were tyre cord fabric. The undisputed facts as set out in para 5 of the judgement are reproduced below in order to better appreciate the context in which the Supreme Court arrived at its finding in that case.

"Rayon fibre is spun into rayon and twisted into cord. The cords are arranged lengthwise, and are commonly described as the "warp". They are packed 25 to the inch. By a process of weaving, cotton threads are wefted through a loom across the cords. The wefts are thinner and fewer than the cords, being not more than two to five per inch.

The cord component comprises the major content of the product. The unprocessed rayon tyre cord fabric so produced is sold in the form of rolls in the market. After initial chemical treatment it is put through a process of rubberizing in the tyre manufacturing plant.

The rayon tyre cord fabric is used as a reinforcing base in the manufacture of tyres. It is a product generally intended for industrial use. The rayon tyre cord employed as a component in the manufacture of rayon tyre cord fabric is also sold directly as such.

It is sold packed on cones, somewhat like yarn is sold. Tyre cord is purchased directly by some tyre manufacturers, who by applying the same process of putting in the wefts, convert it into a tyre cord fabric for use in the tyre".

The product so manufactured, namely, tyre cord fabric was held by the Supreme Court to fall under Item No. 22 CET, namely, "Rayon or artificial silk fabric". Paras 12, 13 and 14 of the judgement which contain the reasoning leading to the conclusion are reproduced below : - "On a comprehensive consideration of the material before us, there is no escape from the conclusion that by and large a tyre cord fabric is regarded as a textile fabric. The peculiar feature that the tyre cord constitute the dominating element indicating the use to which the fabric is put and the close concentration in which it is packed in contrast to light density with which the weft thread is woven does not detract from the conclusion that what we have is a textile fabric. We are concerned with the product manufactured and sold by the appellant. It is wholly immaterial that once tyre cord fabric has, in the hands of the tyre manufacturer, undergone the process of rubberising and is embedded in the tyre body the significance of the weft thread is greatly reduced. It may also be that in the more modern process of manufacturing tyres what is used is cabled rayon with hawser twists with the cords assembled in parallel order and rubberised without the intermediate process of weaving on a loom. The material on the record, however, indicates that the product manufactured by the appellant does not fall in that category. It is a woven fabric in which the intermediate process of weaving the weft thread across, the warp cord is an integral stage of manufacture. When the purchaser buys the product, it is .the entire integrated woven fabric which he buys, it is not merely the tyre cord by itself. If tyre cord was all that he desired, he would purchase that commodity, which is readily available, and not tyre cord fabric. We may also point out that Item 22 of the First Schedule to the Central Excises and Salt Act speaks of "all varieties of fabrics", language wide enough to include the rayon tyre cord fabric manufactured by the appellants.

It was contended by Shri L.N. Sinha, for the respondents, that industrial fabrics are not envisaged within the expression "rayon fabric" in Item 22 of the First Schedule to the Central Excises and Salt Act. As we have already pointed out, the item refers to "all varieties of fabrics" and it will be noticed that Item 22(3) speaks of fabrics impregnated or coated with preparations of cellulose derivatives or of other artificial plastic materials which, we are told, would include rubberised cloth, tarpaulin cloth, P.V.C. cloth, water proof cloth and tent cloth. A whole range of fabric is included.

It is then urged by Shri Sinha that when the Additional Duties of Excise (Goods of Special Importance) Act, 1957 was enacted Parliament could not have intended the expression "rayon fabric" to included rayon tyre cord fabric. It is pointed out that the Statement of Objects and Reasons pertinent to the Act refers to mill-made textiles, and the submission is that the item in the First Schedule to that Act refers to fabric which affects the common man, which finds place in a popular market and is intended for popular use, and does not refer to a commodity which caters to the needs of a special category of consumers and is devoted to a particular use only. Now, the tyre manufacturing industry is growing importance and had an increasingly important role to play in everyday life. That is evident from the overwhelming expansion of automobile traffic prompted by the complex needs of a constantly enlarging economy. The daily life of an average citizen is profoundly affected by the automobile, be it passenger bus or a goods truck or the ubiquitous scooter. Tyres are needed for all. In rular areas tyres are now coming into use for bullock carts. It is futile to suggest that the tyre plays a less substantial role than other popular commodities in modern life. And, therefore, it is but a short step to recognising the status of what goes into the manufacture of a tyre-the rayon tyre cord fabric as "goods of special importance". It may be that unlike the cotton, silk, woollen and rayon fabrics used as wearing apparel or furnishing material the rayon tyre cord fabric is not directly employed for 'the' satisfaction of a domestic need.

Nevertheless, as an integral and vital constituent of an automobile tyre it is intimately involved in the diurnal activity of human life." 57. It has been strenuously urged by the learned Counsel for the appellants that the end-product, namely, pvc conveyor belting should alone be looked at for the purpose of resolving the present dispute and not the so-called carcass which admittedly, is a woven product. (The Counsel had fairly stated that the carcass was presently being subjected to duty as fabric, but the said assessment was being contested). This argument is clearly untenable if we look at the rate of duty shown against Sub-item III of Item No. 19 CET which, as noted earlier, is expressed as a duty for the time being leviable on the base fabric if not already paid, plus 30% ad. val. Therefore, even if the base fabric (carcass in this case) had not been subjected to duty, while assessing the end-product (assuming that it falls under Sub-item III of Item No. 19), the duty to be levied can be determined only after ascertaining the duty leviable on the base fabric. And, for this purpose, it is essential to determine the classification of the base fabric. On this reasoning, one has to consider the so-called carcass and determine whether it would fall within the ambit of the expression "cotton fabrics" as set out in Item No. 19 CET. As noted earlier, the carcass comprises of cotton yarn. In the write-up on the process of manufacture furnished by the appellants to the revisional authorises, there is no mention of any other constituent yarn or fibre (if nylon or of other fibre or yarn is also used, the question of classification would need to be considered having regard to the relative compositions of the different constituent fibres and yarns). In the DCM case before the Supreme Court (referred to above), rayon tyre cord fabric comprised of rayon cord warp with wefts comprised of cotton threads thinner and fewer than the rayon cords. The rayon cord component comprised the major content of the product. The un-processed rayon cord fabric so produced is sold in the form of rolls in the market. After initial chemical treatment it is to be put through a process of rubberizing in the tyre manufacturing plant. The rayon cord fabric is used as a re-inforcing base in the manufacture of tyres. It is a product generally intended for industrial use. It is this type of rayon tyre cord fabric that the Supreme Court held fell under Item 22 CET (i.e., rayon or artificial silk fabrics, all varieties). In coming to this conclusion, the Court took into account the commercial parlance test as also the definition of the terms "fabric" in the "Mercury" dictionary of textile terms, "The Man-Made Textile Encyclopaedia" and other authorities. In the present case, as has been noted earlier, the so-called carcass comprises solely of twisted cotton yarn, of course, subjected to the process of dipping and soaking in liquid pvc mix. The appellants have themselves stated that M/s Dunlop buy the carcass from outside. On the question whether beltings used in industrial application such as power transmission or for handling or conveying materials are known as "fabrics", the learned Departmental Representative has placed reliance on "The New Encyclopaedia of Textiles", 3rd edition, brought out by the Editors of American Fabrics and Fashions Magazine. Pages 502 and 503 in that publication contain a write-up on different types of beltings used in industrial application and these beltings are included in the section on industrial fabrics which deals with "a large and important group of textiles which includes woven and non-woven cloths vital to many industries, ranging from primitive agriculture to jet transportation". The authorities referred to in the Supreme Court judgement also clearly set out that the term "fabric" could cover all textiles, no matter how constructed, how manufactured or the nature of the material from which made. In my view, the ratio laid down by the Supreme Court in the DCM case is squarely applicable to the facts of the present case. There is thus little doubt that the product carcass comprised, in so far the fibre or yarn constituent goes, of only cotton, would come within the ambit of the expression "cotton fabrics" as defined in Item No. 19 CET. The contention of the appellants that since the cotton content of the end-product namely, pvc conveyor belting is only of the order of 21%, it cannot come within the scope of Item No. 19 is clearly untenable because, as I have stated earlier, the classification of the base fabric has to be first determined and in this determination, it is the composition of the base fabric that is relevant and not the composition of the end-product. That this is so is clear from the proviso to Item No. 19 which, in terms, says that in the case of fabrics impregnated, coated or laminated, the predominance or percentage tests laid down in the opening clause of the item shall be in relation to the base fabrics which are impregnated, coated or laminated.

58. The next question which arises is whether the end-product, namely, pvc solid woven coal conveyor belting would come within the mischief of Sub-item III of Item 19 CET. The said sub-item covers cotton fabrics, impregnated, coated or laminated with preparations of cellulose derivatives or of oilier artificial plastic materials. On a careful study of the process of manufacture which involves coating of the carcass in a coating plant with pvc liquid, there is no scope for doubt that the pvc conveyor belting in the present case falls within the said Sub-item III of Item No. 19 CET. The appellants have strenuously contended that the end-product, namely, pvc conveyor belting is not known in the market as a fabric. They have contended that pvc belting cannot be brought under Item No. 19(III) also for the reason that if the intention of the Legislature was to cover the said goods within the scope of the item, it would have been specifically so included in terms as in the case of Item No. 16-A CET ("Rubber Products") wherein Sub-item (4) expressly specifies transmission, conveyor or elevator belts or belting of vulcanised rubber. The latter argument is, in my opinion, manifestly wrong for the simple reason that Item No. 16A is restricted in its coverage. The title of the item reads "Rubber products, the following, namely, :-". It is, therefore, natural that only specified rubber products could be brought within the purview of the said item. The only possible inference can, therefore, be that transmission and conveyor beltings have been specifically mentioned as a sub-item, since they were sought to be taxed as specified rubber products. On the other hand, item No. 19 relating to cotton fabrics takes within its ambit "...all varieties of fabrics manufactured either wholly or partly from cotton ...". On the other contention that pvc conveyor belting is not known as a fabric, it has already been noted that industrial belting used for power transmission or in handling and conveying material is known and recognised as industrial fabrics by trade, industry and commerce as evidenced by the "New Encyclopaedia of Textiles" published by the Editors of American Fabrics and Fashions Magazine to which reference was made by the Departmental Representative, just as tyre cord fabric used for the production of tyres, which was the disputed product in the DCM case, is also known and recognised by trade, commerce and industry as an industrial fabric.

It should also be noted that the "Glossory of Textile Terms" published by the Indian Standards Institution (IS : 2364-1979), though it does not in terms show "belting" in the alphabetical arrangement of terms, contains 2 terms, namely, "impregnated fabrics" and "industrial fabrics" and assigns meanings to them as follow : "Impregnated Fabrics-Fabrics whose interstices in the yarn have been filled with chemical compound so as to cover the entire surface.

Commonly used for leather bags, garments, insulation tapes, etc.

Industrial Fabrics-Fabrics made from man-made or natural yarn which are commonly used on machines such as belting duck, filter cloth, sizing flannel, etc," It is clear that the subject pvc conveyor belting would fall within the ambit of impregnated fabrics, though the use in the present case may not be for leather bags, garments or insulating tapes which uses are given as common uses of impregnated fabrics in the ISI publication.

There is, therefore, no doubt, that the subject pvc conveyor belting clearly falls within the ambit of Sub-item III of Item 19 CET, 59. The appellants' contention that their product is identical to that of Dunlop has not been substantiated. On the face of it, the claim does not seem to be correct. As observed from the order dated 28-10-1980 passed by the Government of India on the revision application of Dunlop, duty-fabric in different plies after being dipped into pvc solution and after being given a thicker coating of pvc on the two other sides are subsequently fused and made into conveyor pelting. The process of manufacture followed by the appellants, as described by them before the revision authority as well as the High Court appears to be different. There is no contention that the process of manufacture followed by the appellants involves different plies of the base fabric as in the Dunlop process. It has not been established by evidence that the product manufactured by the appellants and Dunlop are indentical with reference to the process of manufacture, material composition, constitution and other relevant factors. It is pertinent to note here that in the DCM case before the Supreme Court, the Board of Revenue (Rajasthan) had, in holding that rayon tyre cord fabric is not a fabric within the meaning of Item No. 18 of the Schedule to the Rajasthan Sales Tax Act ["All cotton fabric, rayon or artificial silk fabric, woollen fabrics as denned in the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Central Act 58 of 1957)". The expression "cotton fabrics", "rayon or artificial silk fabrics" and "woollen fabrics" were assigned, by virtue of Section 2(c) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957, the meanings assigned to them in the corresponding items of the Central Excise Tariff Schedule], had noted that the tyre body or carcass consisted of a series of layers of cord fabric in the form of plies buried in rubber and that the significant factor in the tyre cord fabric is represented by the tyre cord. It was this type of tyre cord fabric which was the subject-matter of the dispute before the Supreme Court. The Tariff Advice No. 68/80, dated 3-11-1980 does not speak out the reasoning or logic leading to the view expressed therein. This is apart from the fact that the said Tariff Advice is not binding on this Tribunal as fairly stated by the learned Counsel for the appellants.

60. In the light of the foregoing discussions, Notification No.273/77-C.E.( dated 11-8-1977, which exempts pvc coated or impregnated conveyor belting, falling under Sub-item III of Item No. 19, from so much of duty of excise leviable thereon as is in excess of 24% ad.

vol., provided the appropriate duty of excise has been paid on the base fabric, need not, in my view, be considered as seeking to bring in, as if by the back-door, pvc conveyor belting within the scope of the said sub-item when the product does not actually fall under Item No. 19. In the view I have taken, the product falls under Sub-item No. III of Item No. 19 CET.


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