THE COLLECTOR OF CENTRAL EXCISE, BARODAversusM/S. THE GAEKWAR MILLS LTD.

A          THE COLLECTOR OF CENTRAL EXCISE, BARODA
                                  v.
                     MIS. THE GAEKWAR MILLS LTD.

                               OCTOBER 11, 1996

B                [S.P. BHARUCHA AND SUHAS C. SEN, JJ.]


           Central Excise Tariff, Item 19 and 22-Whether fabric containing 33%
    polyester, 32% viscose and 35% cotton is classifiable under Item 19 or Item
    22-Fact that fabric not known in the market as cotton but as man-made           ..
C   fabric not disputed by the Revenue-Held, fabric classifiable as man-made
    fabric; cotton not shown to be predominant fibre percentage wise or weight-
     wise.

          The respondent manufactured a variety of fabric which contained
D   33% polyester, 32% viscose and 35% cotton. The case of the Revenue was
    that the product was cotton fabric classifiable under Item 22 of the Central
    Excise Tariff Schedule. However, the CEGAT took the view that it was
    man-made fabric and fell under Item No. 19 of the Tariff Schedule. The
    Revenue appealed to this Court.

E         Dismissing the appeal, this Court

          HELD : 1.1. The fact that the fabric was not known in the market
    place as cotton fabric bqt 11s m11n-made fabric was not disputed by the
    Revenue. An excise entry has to be understood in the sense in which it is
F   understood in the marke.t_place unless there was a special definition to the
    contrary. There is no such definition or rule which laid down that even if
    a fabric was comprised of only 35% cotton, it would have to-be treated as
                                                            <
    cotton fabric. [476-D]

          Collector of Central Excise v. Rajasthan Spg. & Wvg. Mills Ltd., [1993]
G Supp. 1 sec 420, referred to.

          1.2. Either percentage-wise or weight-wise, cotton has not been found
    to be the predominant fibre as a matter of fact. There is no law that, in
    such a situation, cotton must be deemed to be the predominant fibre and
H   the fabric must be treated as cotton fabric. [477-C]
                                         472
           COLLECTOROFC.E.v.GAEKWARMILLSLTD.[SEN,J.)                          473
                                    .
        CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1601 of A
1985.

      From the Judgment and Order dated 17.9.83 of the Customs, Excise
and Gold (Control) New Delhi in Order No. 602/83-D in A. No. E.D. (SB)
No. 882 of 1983-D.
                                                                                     B
        N.K. Bajpai and C.V.S. Rao for the Appellant.

        Ms. Amrita Mitra for the Respondent.

        The Judgment of the Court was delivered by                                   c
      SEN, J. This is an appeal by the Collector of Central Excise against
an order passed by the Customs, Excise and Gold (Control) Appellate
Tribunal (CEGAT). The controversy in this case is about the classification
of a particular variety of fabric known as Sort No. 89225 manufactured by
the Gaekwar Mills Limited, the respondent herein. There is no dispute D
regarding the composition of this fabric which contains 33% polyester, 32%
viscose and 35% cotton. Polyester is a non-cellulosic man-made fibre, while
viscose is a cellulosic man-made fibre. The case of the Collector of Central
Excise is that the fabric falls under Item 19 of the Central Excise Tariff
Schedule, whereas the CEGAT has taken the view that it falls under Item E
No. 22 of the Tariff Schedule.

        Relevant extracts from the aforesaid Tariff Items are given below:

          "Item No. 19. Cotton Fabrics.
                                                                                     F
          "Cotton Fabrics" means all varieties of fabrics manufactured either
          wholly or partly from cotton and includes dhoties, sarees, Chad-
          ders, bedsheets, counterpanes, tableclothes, embroidery in the
          piece, in strips or in motifs and fabrics impregnated, coated or
          laminated with preparations of cellulose derivatives or of other           G
          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-cel-
          lulosic fibres or yarn or both:

                                                                                     H
    474                  SUPREME COURT REPORTS [1996] SUPP. 7 S.C.R.

A         Explanation II : Where two or more of the following fibres, that
          is to say,

          (a) man-made fibre of cellulosic origin

          (b) cotton
B
           (c) wool

           ( d) silk (including silk noil)

           (e) jute (including Bimilipatnam jute or mesta fibre)
c          (t) man-made fibre of non-cellulosic origin

           (g) flax

           (h) ramie
D          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
E          force issued under the Central Excise Rules, 1944, involves the
           highest amount of duty, shall be deemed to be predominant in such
           fabric and accordingly such fabric shall be deemed to fall under
           the applicable Item.

           Item No. 22. Man-Made Fabrics.
F
          . "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 impreg-
            nated, coated or laminated with preparations of cellulose deriva-
            tives or of other artificial plastic materials, in each of which
G
            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
H          preparations of cellulose derivatives or of other artificial plastic
          COLLECTOROFC.E.v.GAEKWARMILLSLTD.[SEN,J.)                      475

          materials, such predominance shall be in relation to the base A
          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   B
         falling under Item No. 19 or Item No. 21.

          Explanation III : Explanation II under Item No. 19 shall, so far as
          may be, apply in relation to this item as it applies in relation to
          that item."
                                                                                c
          The Tariff Entries are quite clear and there is no ambiguity as to
  their meaning. In order . to bring the fabric manufactured by the respon-
  dent within "Cotton Fabrics", the Collector will have to establish that in
, such fabric cotton predominates in weight or such fabric contains more
  than 40 per cent by weight of cotton and 50 per cent or more by weight of D
  non-cellulosic fibres or yarn or both. Neither of the two conditions has been
  fulfilled in this case. It is not the case of the Collector that even though
  only 35 per cent of the fabric is made out of cotton, such cotton exceeds
  the combined weight of polyester or viscose fibre which account for 65 per
  cent of the fabric. "Predominates in weight", in this context, must mean E
  weight in excess of the combined weight of the other two types of fibres.
  There can be a second type of case where any fabric may contain more
  than 40 per cent by weight of cotton and 50 per cent or more by weight of
  non-cellulosic fibre (polyester in this case) or yarn or both. In such a case,
  even though cotton does not predominate, the fabric will be treated as
  cotton fabric. That is a legal fiction which does not come into play in this F
  case because the fabric contains only 35 per cent cotton and 33 per cent
  polyester (non-cellulosic fibre). It is not the case of the Department that
  the weight of cotton is more than 40 per cent of the fabric and the weight
  of non-cellulosic fibre is 50 per cent or more.

       It was specifically 'argued on behalf of the assessee before the         G
 Tribunal that in order to predominate in weight, cotton must be more than
 50 per cent in weight. This was not the case here. The facts were not
 disputed by the Revenue but a legal argument was advanced that if a fabric .
 comprised of three or four types of fibre, it was enough if the cotton was · ·
 the largest constituent of the fabric. The predominant fibre of the fabric H
    476                   SUPREME COURT REPORTS [1996] SUPP. 7 S.C.R.
A would be cotton. Therefore, the fabric will have to be treated as cotton
    fabric. The Tribunal rejected this argument by pointing out that this
    contention, if upheld, would lead to absurdity. Even if a fabric was com-
    posed of five different fibres of which cotton was only 22 per cent in weight,
    even then, it will have to be held that cotton was the predominant fibre
    and the fabric will be cotton fabric. The Tribunal held that the
B   predominance in Tariff Items 19 and 22 should be absolute predominance,
    i.e., equivalent to more than 50 per cent in weight. That being the position
    in fact, there could not be any doubt that the fabric in dispute in this case
    was not cotton fabric.

C          There is considerable force in the view taken by the Tribunal. But
    we need not express any final opinion on this point. This case can be
    disposed of on another ground. It was pointed out on behalf of the assessee
    before the Tribunal that this fabric was not known in the market as cotton
    fabric. This fact was not disputed by the Revenue. It is well settled that an
D   excise entry must be understood in the sense in which it is understood in
    the market place unless there is a special definition to the contrary. There
    is no such definition or rule in the Excise Act which lays down that even
    if a fabric comprises of only 35 per cent cotton, it will have to be treated
    as cotton fabric.

E         It was asserted before the Tribunal on behalf of the assessee that the
    fabric under consideration was known in the trade as "man-made fabric".
    This again was not disputed by the Revenue.

          On behalf of the appellant, our attention was drawn to the case of
p   Collector of central Excise v. Rajasthan Spg. & Wvg. Mills Ltd., [1993] Supp.
  1 SCC 420. In that case, the dispute was about classification of three types
  of yarn containing polyester, viscose and acrylic fibre. The question was
  how to classify such mixed yarns. It was found for a fact that in all the three
  types of yarn manufactured by the assessee, the percentage of acrylic fibre
  was 40 per cent as compared to the other two fibres which were either 24
G per cent and 26 per cent or 45 per cent and 5 per cent. It was held that
  acrylic fibre must be held to predominate in weight in the composite yarn
  manufactured by the assessee. The reason given was that Explanation III
  to sub-item (iii) under Tariff Item No. 18 made it clear that where a
  composite yarn contained varioµs types of yarn which were all equal in
H weight, then the yarn which attracted the highest amount of duty shall be
          COLLECTOR OF C.E. v. GAEKWAR MILLS LTD. [SEN, J.)                477

deemed to be predominant. Because of this explanation, it was held that           A
even though the percentage of acrylic fibre weight-wise was only 50 per
cent of the yarn, by virtue of the explanation it must be treated to be the
dominating yarn because it attracted the highest amount of tax. In such a
situation, by legal fiction, acrylic fibre was held to be the predominant fibre
and the yarn was classified accordingly.
                                                                                  B
      The appellant cannot derive any assistance from this decision. It
merely lays down that in the case of composite yarn even though acrylic
fibre constituted 50 per cent in weight, it will be deemed to be the
predominant fibre by virtue of the specific statutory provisions to that effect
contained in Explanation III to sub-item (iii) under Tariff Item No. 18. The      C
case before us is in respect of fabric and not yarn. Either percentage-wise
or weight-wise, cotton has not been found to be the predominant fibre as
a matter of fact. There is_ no law that in such a situation, cotton must be
deemed to be the predominant fibre and the fabric must be treated as
cotton fabric.
                                                                                  D
      In view of the aforesaid and also having regard to the facts of the
case, this appeal must fail and is hereby dismissed. There will be no order
as to costs.

S.M.                                                       Appeal dismissed.