Skip to content


Gaekwar Mills Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)(14)ELT2491TriDel
AppellantGaekwar Mills Ltd.
RespondentCollector of Central Excise
Excerpt:
.....be read with explanation ii after that item. this explanation made a distinction between man-made fibre of cellulosic origin and man-made fibre of non-cellulosic origin. item 22 also made a distinction between cellulosic fibre or yarn and non-cellulosic fibre or yarn. explanation iii under item 22 made applicable explanation ii under item 19. in the light of the wording of these two items, the content of cellulosic fibre and of non-cellulosic fibre in the fabric should be taken separately and since each of them was less than the content of cotton, the latter should be taken as predominant in weight and therefore the goods should be taken as falling under item 19.6. in conclusion shri tayal referred to authorities to the effect that in the interpretation of a taxing statute if two views.....
Judgment:
1. This appeal, against the order dated 21-2-83 of the Collector of Central Excise (Appeals), relates to the classification of a particular variety of fabric, known as Sort No. 89225, manufactured by the appellants. 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 appellants have contended that the fabric falls under Item 22 of the Central Excise Tariff Schedule, whereas the authorities below have taken the view that it falls under Item No. 19 of the said Tariff Schedule.

2. 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 or partly from cotton and includes dhoties, sarees, chadders, bed-sheets, bed-spreads, counterpanes, table-cloths, 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 predominates in weight, or (ii) such fabrics 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, 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.

"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 materials, in each of which man-made (i) 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 II.-This Item does not include glass fabrics or fabrics falling under Item No. 19 or Item No. 21.

Explanation HI.-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.

3. Smt. Rainu Walia, appearing for the appellants, submitted that Item 19 covers only those fabrics in which cotton predominates in weight.

(The provision by which it includes fabrics which contained more than 40% of cotton and 50% of non-cellulosic fibres is not relevant to this case). Explanation II to Item 22 no doubt excludes fabrics falling under Item 19, but since in these fabrics cotton does not predominate by weight, this explanation is not applicable; Explanation II under Item 19, which is made applicable to Item 22 through Explanation III under that item, also does not affect the issue, since this is not a case where two or more of the specified fibres are equal in weight in the fabric.

4. Smt. Walia submitted that trade nomenclature should be given importance and that the fabric under consideration was known in the trade as a man-made fabric. She further submitted that in interpreting Item No. 19, there was no justification for distinguishing between cellulosic and non-cellulosic man-made fibres. According to her the Department had not discharged its burden of showing that the goods came squarely within the scope of the tariff item which, was sought to be applied. She finally submitted that in the two views where possible, the view which was in favour to the assessee should be adopted.

5. For the Department, Shri Tayal stated that there was no dispute on the facts. On the merits, he submitted that Item 19 had to be read with Explanation II after that item. This explanation made a distinction between man-made fibre of cellulosic origin and man-made fibre of non-cellulosic origin. Item 22 also made a distinction between cellulosic fibre or yarn and non-cellulosic fibre or yarn. Explanation III under Item 22 made applicable Explanation II under Item 19. In the light of the wording of these two items, the content of cellulosic fibre and of non-cellulosic fibre in the fabric should be taken separately and since each of them was less than the content of cotton, the latter should be taken as predominant in weight and therefore the goods should be taken as falling under Item 19.

6. In conclusion Shri Tayal referred to authorities to the effect that in the interpretation of a taxing statute if two views were possible, the courts should not interfere merely because" the Department had taken a particular view. {We may observe straightaway that while this consideration may be applied by the courts when matters are taken to them under their writ jurisdiction it obviously cannot apply to cases coming up in a regular appeal before the Tribunal, which is the appellate authority specifically set up for that purpose).

7. In considering the question before us two main questions arise. One .is as regards the meaning to be attached to the expression "predominates in weight" occurring in Item 19. The other is whether for the purpose of considering whether a fabric is a "man-made fabric" within the meaning of Item 22, cellulosic fibres and non-cellulosic fibres should be combined or should be considered separately.

8. On the first question, namely the meaning of the expression "predominates in weight", two views are no doubt possible. One is that the fibre should be the major constituent of the fabric, that is, that it should comprise more than 50% of the weight of the fabric. The other is that it should be the single largest constituent of the fabric. Of the two possible interpretations, it is the first which commends itself to us for the reasons which follow.

9. The expression has to be seen in its present context, which is to decide whether a fabric can be called a cotton fabric, a man-made fabric, and so on. The normal and logical approach in deciding such a question would be to consider whether a particular fibre constitutes the bulk of the fabric, and not whether it happens to be the single largest constituent, irrespective of its absolute quantum. Thus, if a fabric is composed of 5 or 6 different fibres, the largest of which constitutes about 20% by weight, it would not be logical to call the fabric as one made from that fibre, merely because it is the largest single constituent.

10. This interpretation is also borne out by a reference to other items in the Central Excise Tariff Schedule. The tariff contains a number of items relating to various non-ferrous metals, such as copper, zinc, aluminium and lead. In each of these items, there is an explanation relating to the classification of alloys. Thus, Explanation I under Item 26A reads as under :- " "COPPER" shall include any alloy in which copper predominates by weight over each of the other metals." The other items contains similarly worded explanations. It will be seen that in these items it is specifically provided that the predominance should be over each of the other metals in the alloy (emphasis added).

With this qualification there is no doubt that a given alloy should be considered as an alloy of that metal which forms its largest single constituent. There is no such qualification in the descriptions of Items 19 and 22. In view of this contrast between the wording of different items in the same Tariff Schedule, it is justifiable to conclude that the predominance in Items 19 and 22 should bean absolute predominance, that is, equivalent to constituting more than 50% of the weight.

11. Although the Central Excise Tariff is not based on the CCCN, it is interesting to note that in Section XI of the CCCN covering "textiles and textile articles", Section Note 2(A) provides, that goods...of a mixture of two or more textile materials are to be classified as if consisting wholly of that one textile material which predominates in weight over any other single textile material".

12. Explanation II under Item 19 and Explanation III under Item 22 are not directly applicable to the present case, since all the 3 fibres in the fabric (Sort No. 89225) are unequal in weight, 13. For the reasons given above, we consider that the expression "predominates in weight", without further qualification as in Items 26A etc., should be taken to mean that the fibre should comprise over 50% of the weight of the fabric.

14. The next question would be whether for the purpose of applying Item 22, a distinction should be made between cellulosic and non-cellulosic fibre. At first sight it might appear that this is necessary, because of the word "or" between "cellulosic fibre or yarn" and "non-cellulosic fibre or yarn" used in the description of the item. It could be argued that if the intention was not to make any distinction between cellulosic and non-cellulosic fibres, the description could merely have included the words "in each of which man-made fibre or yarn predominates by weight". On a fuller consideration, however, it will be seen that a more logical conclusion would be that no distinction should be drawn between the cellulosic and non-cellulosic man-made fibres when considering whether a fabric is a man-made fabric or not.

15. The first argument for this purpose is similar to that in para 9 above. For the purpose of deciding whether a fabric as a whole is a "man-made fabric", as understood by the trade and by the consumer, if over 50% of the weight consists of man-made fibres, it should matter little whether a part of the man-made fibre is cellulosic and another part is non-cellulosic. It would be anomalous and illogical to hold that a fabric in which 65% of the weight comes wholly from man-made cellulosic fibre is a man-made fabric; a fabric in which 65% of the weight comes from man-made non-cellulosic fibre is a man-made fabric; but one in which 35% of the weight comes from man-made cellulosic fibre and another 30% from man-made non-cellulosic fibre (or vice versa) is not a man-made fabric.

16. It is well-known that the word "or" does not invariably have to be read in a disjunctive sense, or as separating two alternatives, but, depending on the context, it may have to be read as meaning "and". [A detailed discussion of this question is contained in the Tribunal's order No. B-326/83, dated 29-4-1983, in the case of Copper Rollers Private Ltd., Bombay v. Collector of Central Excised, Bombay, reported in 1983 E.L.T. 981 (CEGAT)]. The present is clearly a case where the context requires that the word "or" between "cellulosic..."and "non-cellulosic..." should be read as indicating that each variety could be wholly or partly a substitute for the other.

17. Shri Tayal had pointed out that Explanation II to Item 19, corresponding to Explanation III to Item 22, also draws a distinction between man-made cellulosic fibre and man-made non-cellulosic fibre. We have already pointed out that this Explanation if literally read can lead to anomalous or absurd results. We would point out a further anomaly which would follow if we were to draw a distinction between cellulosic and non-cellulosic fibre in the present context. In the light of our interpretation of the expression "predominates in weight", we would have to hold that the fabric which is the subject-matter of these proceedings would not fall under either Item 19 or Item 22, but would have to be relegated to the residuary Item 68. And this cannot be a solitary case. It would certainly be anomalous if, when the tariff contains an item for cotton fabrics and another for man-made fabrics, each of which provides for admixture of a variety of other fibres, a fabric consisting partly of cotton and partly of man-made fibres should have to be relegated to the ultimate residuary item.

18. We therefore hold that for the purpose of deciding whether a fabric is a "man-made fabric" within the meaning of Item 22, the content of both cellulosic and non-cellulosic man-made fibres should be taken together.

19. In view of our findings on the two basic issues, we hold that the fabric under consideration, which contains 65% of man-made fibres and 35% of cotton, was correctly classifiable under Item 22 of the Central Excise Tariff. We accordingly allow the appeal, with consequential relief to the appellants.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //