Customs, Excise and Gold Tribunal - Delhi
C.C.E. vs New Gujarat Synthetics Ltd. on 30 August, 1995
Equivalent citations: 1997(89)ELT727(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. The Collector of Central Excise, Ahmedabad being aggrieved with the order-in-appeal dated 18-6-1986 passed by the Collector of Central Excise (Appeals), Bombay had filed the present appeal. The respondents are M/s New Gujarat Synthetics Ltd., Ahmedabad
2. The matter relates to the classification of Cellulosic spun yarn falling under Item No. 18/III of the erstwhile First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the 'old Central Excise Tariff')- The yarn was made out of polyester fibre waste, and contained cotton and viscose staple fibre of cellulosic origin and polynosic fibre of cellulosic origin. The respondents had classified the yarn in question under Item No 18-III (i) which covered the cellulosic spun yarn not containing any man made fibres of noncellulosic origin. In the show cause notice dated 29-10-1983, it was alleged that the said yarn was correctly classifiable under Item No 18-III (ii) which covered the cellulosic spun yarn containing man-made fibres of non-cellulosic origin. The Assistant Collector of Central Excise, Ahmedabad who adjudicated the matter, held that the yarn in question was rightly classifiable under Item No. 18-III (ii) of the old Central Excise Tariff. On appeal, however, the Collector of Central Excise (Appeals) Bombay relying upon an earlier order of his predecessor, held that the yarn in question was classifiable under Item No 18-III (i) of the Tariff.
3. The matter was posted for hearing on 6-7-1995 when Sh Mohan Lal, DR appeared for the appellants-Revenue. No one was present for the respondents. The appellants had reported the service of notice dated 20-3-1995 on the official liquidator on 5-5-1995 as the unit was reported to be under liquidation. There is no communication from the Official liquidator. The notice of the hearing had been sent telegraphically to the unit on 26-5-1995. Accordingly, we proceed to hear the appeal ex-parte since there is no representation on behalf of the respondents.
4. Sh Mohan Lal, DR stated that as the yarn in question contained man-made fibre of non-cellulosic origin, it was correctly classifiable under Item 18-III (ii) of the Tariff. Non-cellulosic waste is made of fibre/yarn waste and is usable only after it is made fibrous. The learned DR submitted that the order of the Collector of Central Excise (Appeals) Bombay was not a correct order. The learned DR referred to the following decisions:
(i) Modern Syntex (I) Ltd. v. CCE, Jaipur - 1994 (73) E.L.T. 909 (Tribunal)
(ii) CCE, Hyderabad v. Priyadarshini Spg. Mills Ltd. - 1990 (29) ECR 520 (CEGAT SB-D)
5. We have carefully considered the matter. The yarn in question was described by the respondents as cellulosic spun yarn 40-S containing not more than l/6th by weight of man made fibres of non-cellulosic origin. In their declaration, they have stated that their yarn was composed of the following:
(A) (i) 52% Polynosic fibre of cellulosic origin
(ii) 33% cotton
(iii) 15% waste of non-cellulosic origin (B) (i) 33% cotton
(ii) 26% fibre of cellulosic origin polynosic
(iii) 26% viscose fibre of cellulosic origin
(iv) 15% polyester fibre waste of non-cellulosic origin.
There is no dispute that the yarn in question was a spun yarn. The respondent company classified it under Item No. 18-III (i) which covered cellulosic spun yarn (yarn in which man-made fibre of cellulosic origin predominated in weight) not containing any man-made fibres of non-cellulosic origin. The Revenue sought to classify such yarn under Item 18-III (ii) which covered the above mentioned cellulosic spun yarn containing man-made fibres of non-cellulosic origin on the ground that the spun yarn contained polyester fibre which was obtained out of the polyester fibre waste of non-cellulosic origin. For ease of reference, the Tariff Item 18-III is extracted below:
"III Cellulosic spun yarn Yarn in which man-made fibre of cellulosic origin predominates in weight and in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power:
(i) not containing any man-made fibre of non-cellulosic origin
(ii) containing man-made fibres of non-cellulosic origin"
6. The main defence of the respondent company is that the waste could not be equated with fibre. As will be seen from the Tariff entry extracted above, the Tariff entry uses the expression 'containing'. The point for consideration is whether the cellulosic spun yarn under assessment contained or did not contain man-made fibres of non-cellulosic origin.
7. Most textiles are produced by twisting fibres into yarns and then knitting or weaving the yarns into a fabric. The fibre raw material for all fabrics is a tiny thread hair like piece of short length. Some fibres occur in nature and are known as natural fibres. Others are man-made manufactured fibres such as regenerated fibres modified from natural materials (cellulosics) and synthetic fibres made from chemicals (non-cellulosic polyester, nylon, acrylic). There are also animal fibres (wool and silk) and mineral fibres (Glass, asbestos, metallic). For producing mixed yarns, various fibres, non-cellulosic, cellulosic, natural are mixed in different proportions keeping in view the resultant yarn to be produced. According to the Webster's New World Dictionary, yarn is defined as any fibre as wool, flax, cotton, nylon, etc., spun into strands for weaving, knitting or making thread. The Hon'ble Supreme Court in the case of Commissioner of Sales-tax, UP v. Sarin Textile Mills - [1975 (35) STC 634] had held that the fibre in order to answer the description of yarn must have two characteristics, firstly, it should be a spun strand and secondly, such strand should be primarily meant for use in weaving, knitting or rope making.
8. No spun yarn could be spun without its constituent material (s) being converted into a sliver in the form of a loose rope. There could be a number of slivers say 6 or 8 depending upon the requirement. All the slivers at a time are drawn into another -1 sliver. This sliver is then formed into a thin strand called roving. Different kinds of fibres may be blended at different stages preparatory to the spinning of the blended spun yarn - before or when the slivers are drawn or when the roving is spun. At the final stage, the roving is twisted, spun on a spinning frame to form yarn. Some spinning frames produce yarn directly from slivers. The spinning processes basically include (1) Drafting-reducing the constituent material to smaller and smaller structures (2) Straightening and making the fibres parallel (3) Putting twist into the yarn. Spun yarn is the final product of spinning. It is twisted to give it strength and to make the fibres cling together. Many yarns are tied continuously end to end to form one long yarn. Sometimes two or more strands of yarn are twisted to give for added strength. Each strand of such heavier yarn is referred to as a ply.
9. Yarns are classifiable on the basis of their fibre content. In case of mixed/blended yarn, respective percentages of different fibres determine its classification. Explanation III under Item No. 18 provided as under :
"Explanation III. - Where two or more of the following fibres, that is to say
(a) man-made fibre of cellulosic origin;
(b) cotton;
(c) wool or acrylic fibre, or both;
(d) silk (including silk noil);
(e) jute (including Bimlipatam jute or mesta fibre
(f) man-made fibre of non-cellulosic origin, other than acrylic fibre
(g) flax;
(h) ramie in any yarn are equal in weight, then, such one of those fibres, the predominance of which would render such yarn fall under that sub-item or item (hereinafter in this Explanation referred to as the applicable sub-item or Item), among the sub-items and Item Nos. 18-III, 18A, 18B, 18C, 18D, 18E, 18F-I and 18F-II 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 yarn and accordingly such yarn shall be deemed to fall under the applicable sub-item or item as the case may be."
10. In the case of CCE v. Rajasthan Spinning & Weaving Mills [1995 (75) ELT 36 SC], the Hon'ble Supreme Court had held that blended/composite yarn containing polyester, viscose and acrylic in the ratio of 24%; 26:50 or 45; 5:50 was classifiable under item 18-B (ii) of the erstwhile Central Excise Tariff. Item No. 18-B (ii) covered cotton and acrylic yarn containing more than l/6th by weight of non-cellulosic fibre (other than acrylic fibre) calculated on the total fibre content).
11. Fabrics are identified by their fibre content. Usually fibre content in blended fabrics is represented in percentage terms. Blended fabric was classifiable on the basis of respective fibre percentage of its different constituents. Explanation II under Item 19 which was applicable in relation to other fabric items also is extracted below :
Explantion II. - Where two or more of the following fibres that is to say,
(a) man-made fibre of cellulosic origin;
(b) cotton;
(c) wool;
(d) Silk (including silk noil);
(e) jute (including Bimlipatam 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 Item (hereinafter 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."
12. In the case of Aphali Pharma v. State of Maharashtra [1989 (2) Scale 115], the Hon'ble Supreme Court had held that no part of a Statute is to be taken as superfluous or redundant. Every word in a Statute is to be given a meaning. A construction which would leave without effect any part of the language of a Statute will normally be rejected. Every clause of a Statute is to be construed with reference to the context - and other clauses of the Act so as to make as far as possible a consistent enactment of the whole statute.
13. Item No. 18 (IV) covered non-cellulosic wastes all sorts. It was explained that this item includes only wastes arising in or in relation to the manufacture of man-made fibres (other than mineral fibres) and man-made filament yarns. There are different kinds of waste and they arise at different stages of the production of fibre and yarn. Some waste are used for recovering DMT (Notification No. 168/76-C.E., dated 17-5-1976) while other are used in the manufacture of man-made fibres by the process of recycling (Notification No. 43/80, dated 24-4-1980). Some wastes are subjected to the processes like garnetting, combing, cording and gilling (Notification No. 44/80-C.E., dated 24-4-1980). Notification No 16/82/C.E., dated 4-2-1982 provided for concessional rate for polyester fibre manufactured from wastes.
14. The fact that the waste received was actually used in the production of spun yarn shows that it was a retrievable material and fit for conversion into fibre, in the production of spun yarn. Its end use actually was as a fibre. As it is seen from the Scheme of exemption under Item No. 18, as mentioned above, waste is used for the manufacture of polyester fibre (refer Notification No. 16/82-C.E., dated 4-2-1982), or is used for recovering DMT (refer Notification No. 168/76, dated 17-5-1976). Wastes are also used for the manufacture of man-made fibres and tops through the processes like garnetting, combing, carding and gilling (Refer Notification No. 44/80-C.E., dated 24-4-1980). In this case, we are not concerned with that sort of waste which is fit only for recyling. We are concerned with the waste which is usable and used in the manufacture of spun/blended yarn through the processes which do not involve recycling of such waste.
15. The process of manufacture of spun yarn by the respondents has been given at page 25 of the paper book in the grounds of appeal by the Collector of Central Excise, Ahmedabad as under:
"Non-cellulosic waste is first passed through an opener for opening and the entangled mass if any, is converted into fibre. After mixing and blending the said fibre with other fibres like cotton or viscose the material is passed through 'Blow room', it is collected in lap form and the same is fed into card, from where it comes out in the form of continuous sliver which is then drafted on the draw frame to ensure production of even yarn."
From the above, it is clear that the spun yarn in question contained man-made fibre of non-cellulosic origin, and was correctly classifiable under Item 18-III (ii) of the old Central Excise Tariff.
16. The goods in the case of Collector of Central Excise v. Priyadarshini Spinning Mills Ltd. [1990 (50) E.L.T. 145 (Tribunal)] were described as "yarn including sewing thread of artificial staple fibre not containing generated synthetic staple fibre waste in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power and supplied in a form other than the plain (straight) reel hank". The matter related to the new Central Excise Tariff wherein the description under Heading No. 55.05 and 55.06 was materially different from the description in the earlier tariff items under the old 732 EXCISE LAW TIMES [Vol.89 Central Excise Tariff with which we are concerned. In the case before us, we are concerned with Item 18 (iii) of the old Central Excise Tariff. The Tribunal in the case of Kiran Spinning Mills v. CCE, Bombay [1986 (24) E.L.T. 414 (Tribunal)] had held that a judgment rendered in the context of a particular Tariff entry cannot be automatically applied in interpreting an altered Tariff entry. The Tribunal decision in the case of Priyadarshini was based mainly on the use of expression 'staple' in Heading No. 55.06 of the new Central Excise Tariff. The Tribunal had concluded that the reports of the Chemical examiner were based on misconception of the definition of staple fibre. Similarly in the case of Kerala Spinners Ltd. v. CCE [1992 (57) E.L.T. 301 (Tribunal)], the samples were in the form of lumps of different coloured fibres and heterogenous mass with cut ends in varying short lengths (refer para 15 of the Tribunal order). The Tribunal had based their decision in that case on the appreciation of the expression "staple fibre" and on its earlier decision in the Priyadarshini case referred to above. We do not consider that these decisions warrant any change in the conclusions drawn by us above, keeping the facts of the case before us in view. In the case of Modern Syntex (I) Ltd. v. CCE, Jaipur - 1994 (73) E.L.T. 909 (Tribunal), the Tribunal had held that for the purpose of classification, in the Tariff, it is essential to find whether the yarn contained man-made fibre of non-cellulosic origin when it is a blended yarn. The question before us is not whether the fibre is different from the waste but whether the spun yarn in question contained or did not contain the fibre of non-cellulosic origin. The Tariff entry uses the expression 'containing'. We have seen above that the spun yarn is produced after spinning the fibres, No yarn could be made out of the waste directly. It has to be made fit for mixing and blending with other constituent fibres and/or for forming sliver/roving. The fact that spun yarn has been produced itself establishes that the non-cellulosic waste had been made fit for mixing/blending with other fibres. In the circumstances, there is no doubt that the yarn in question contained fibre of non-cellulosic origin.
17. Taking all the relevant considerations into account, we accept the appeal of the Revenue and set aside the impugned order.