[Order per : M.V. Ravindran, Member (J)]. - The issue in all these appeals is in respect of the classification of the Carpets manufactured by the appellants. The appellants classified the said product, as a “Jute floor coverings” falling under Chapter sub-heading No. 5703.20 while the Revenue wants it to be classified as falling under Chapter sub-heading No. 5703.90.

2. Learned Counsel for the appellants submits that the carpets manufactured by the appellants are liable to be classified as ‘Jute carpets’ under Chapter sub-heading No. 5703.20 only. He submits that the manufacturing process involves the tacking of fibres of jute and Polypropylene together and then Needle punching the same to a Hessian cloth in a single processing, with polypropylene at the top layer. He takes us through the Chapter Note No. 1 of the Chapter 57, and according to him this Chapter note is for the purpose of the classification of the Carpets in the Chapter 57, based upon the exposed surface being of some textile material, and once the carpets are classified under Chapter 57, this Chapter note is not attracted for sub-heading level classification. For this proposition he relies upon the Tribunal’s decision in the case of CCE, Bhubaneshwar v. Champdany Industries Ltd. (T) = 2005 (70) RLT 76 (CESTAT- Kol). He also submits that the sub-heading level classification of the carpets manufactured by the appellants will have to be done, by resorting to the Section note 2A and sub-heading Section notes 2A and 2B to the Section XI of the CETA, 1985. He submits that according to these section notes the classification of the appellants products will be under 5703.20 by virtue of the predominance test i.e. which Textile material predominates by weight over the other textile materials in the product. He further submits that they have been selling these carpets as ‘jute carpets’ from 1988 and are still selling them as ‘jute carpets’. Thus, the commercial identity of the item is jute carpet. The learned Advocate also would submit that the intention and practice of the Government always had been to give the benefit available to jute items to composite items in which jute was a part. The learned Advocate has referred to the exemption notification No. 93/94 which defined carpets of even 35% jute as jute carpets and granted exemption from payment of duty. For these reasons he submits that the correct classification of the appellants products will be under sub-heading No. 5703.20.

3. The learned SDR on the other hand submits that the appellants classification of the product under the sub-heading No. 5703.20 is totally wrong and is misplaced. He submits that the carpets manufactured by the appellants would be correctly covered under sub-heading No. 5703.90. He submits that the carpets as manufactured by the appellants would be known in the market as Polypropylene carpet as the exposed surface of the carpet is made up of said textile materials. He also further submits that the carpets manufactured by the appellants were not known in the market as Jute carpet. He also relies upon technical literature on carpets which would make it amply clear that the carpet is known in the market by its exposed surface. He states that the commercial parlance theory is applicable in this case. He also further submits that the Chapter Note No. 1 of the Chapter 57 is also applicable for the purposes of sub-heading level classification, and by applying the same the product is liable to be classified as falling under sub-heading No. 5703.90. According to him section notes of sub-heading 2B would apply, more so, the sub-note (1) which makes application of Rule 3 of Interpretative Rules to C.E.T.A. 1985, and on application of the same the product is classifiable under sub-heading No. 5703.90. He further submits that if the predominance test is to be applied, even then, since the exposed surface consists of polypropylene the products will be classified under 5703.90.

4.1 Considered the submission made by both sides. In order to appreciate the rival claims it is necessary to reproduce the Chapter sub-headings in question :

“57.03   Other carpets and other textile floor coverings, whether or not

Thus, it is seen that at sub-heading level, what is relevant is the textile material of which the carpet is made. Chapter Note No. 1 to the Chapter 57 which has been relied upon by the revenue reads as under :

‘1. For the purposes of this Chapter, the term “carpet and other textile floor coverings” means floor coverings in which textile materials serve as the exposed surface of the article when in use and includes article having the characteristics of textile floor coverings but intended for use for other purposes.’

4.2 It may be noted here that this note relates to Chapter 57 as a whole and separates out the goods covered by this Chapter from goods covered by other Chapters of the Tariff. It is not in dispute that the exposed surface of the carpets as manufactured by the appellants is polypropylene, which is a textile material and the said products will merit classification under Heading 57.03. The dispute is in regard to the applicability of this note, to sub-heading level classification. It is seen from the manufacturing process as explained by the learned Advocate that the carpet is manufactured in a continuous process and the said carpet is to be considered as of one identity rather than as having separate identity of having a exposed surface and under surface. The tacking of the fibres of polypropylene and jute, to be further needle punched into Hessian cloth brings into existence one commodity that is Carpet. That Chapter Note No. 1 of Chapter 57 is relevant only for the classification of products in that Chapter 57 remained settled by this Tribunal’s decision in the case of Champadany Industries Ltd. case (supra). We have to now revert to the section notes and sub-heading notes to section XI of the CETA, 1985 which are reproduced below :

“2.(A) Products of Chapters 56 to 63 containing two or more textile materials are to be regarded as consisting wholly of that textile material which would be selected under Note 2 above for the classification of a product of Chapters 50 to 55 consisting of the same textile materials.

(B)     For the application of this rule:-

(i)      where appropriate, only the part which determines the classification under Rule 3 for the interpretation of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) shall be taken into account;

(ii)     in the case of textile products consisting of a ground fabric and a pile or looped surface no account shall be taken of the ground fabric;

(iii)    in the case of embroidery of Heading No. 58.05 and goods thereof, only the ground fabric shall be taken into account. However, embroidery without visible ground, and goods thereof, shall be classified with reference to the embroidering threads alone.”

4.3 As can be seen from the above section notes and sub-heading notes the classification of the products falling under Chapters 56 to 63 should be done on the basis of the predominance test, that is to say, the textile materials which predominates by weight over other single textile material. It has been claimed before the adjudicating authorities, that the carpets manufactured by the appellants has jute contents of 75% to 85%. The revenue has not disputed this. This takes us to the second question whether the Hessian cloth has to be separated for the purposes of the predominance test or not. We are of the opinion that the Sub-heading notes as reproduced above specifically indicates the situations when to include the base fabric and when not to include the base fabrics for the predominance test. Since Section Note to Section XI clearly laid down [(ii) of 3 on the last page] when to exclude and when to include the base fabric while determining the predominance test, it would not be permissible to exclude base fabric (Hessian cloth) in the appellants case, while determining predominance. Hence the predominance test ”the appellant’s products has to be done taking the product manufactured by the appellants as a whole and not separating the layers and then applying the predominance test. We would also note that sub-heading Note 2B(i) would apply only if the product is made up of textile materials and a non-textile material. We also feel that the different technical literature produced by both sides do not help us in any way to come to conclusion that the products manufactured are not Jute carpets as the said literature have no material to throw any light on the subject. We find from the records as produced by the appellants that they sell their products to their wholesalers and retailers as “Floor Coverings of Jute”. The revenue’s reliance on a single dealer’s statement indicating that the appellant’s jute carpet are known in the market as “Synthetic Carpet” will be of no consequence as the said statement is unsubstantiated by further evidence in any form and contrary to the description of the goods in sales documents. Further, it has been the intention and practice of the Government that products manufactured partly out of jute also has to be encouraged through exercise exemptions. This is clear from the fact that the Notification No. 50/90 as amended by notification No. 93/94 treats carpets containing 35% of jute also as “jute carpets” eligible for the exemption. The said notification does not specify that only material at the exposed surface should be taken into account for determining the percentage of jute in the carpet. Nor is such a determination practicable.

5. In view of the above we hold that the Carpets manufactured by the appellants would be appropriately classified under Chapter sub-heading No. 5703.20 as carpet “of jute” and not as “other “ carpet under 5703.90. Appeals allowed.