Jyoti Balasundaram, Vice-President - (1.)THE application for waiver of pre-deposit of duty of Rs. 22,70,926/- and penalty of equal amount arises out of the order of the Commissioner of Central Excise, Mumbai as a result of classifying Flock Printed Fabrics (fabric covered partially or fully with textile flocks or preparations containing textiles) under CET sub-heading 5907.12.
(2.)We heard both sides. The applicants place reliance upon Note 5(c) to Capter 59 to contend that since their fabrics contain designs resulting from the flocking, their goods do not fall for classification under Chapter Heading 59.07. They also draw our attention to the fact that samples were produced before the adjudicating authority and that they had explained that adhesive paste on the Fabrics gets the desired design and thereafter flock powder is placed above the fabric and sprayed, resulting in flock printed fabrics of particular design.
We note that the Commissioner in respect of the earlier remand order of the Tribunal directing him to go into the applicability of Note 5 to Chapter 59, has held that Note 5 is not relevant for the reason that there is an entry under Chapter Heading 59.07 for fabric covered, partially or fully with textile flocks or with preparation containing Textile flocks. Prima facie the Commissioner was required to go into the applicability of Note 5 to the fabric in question. Since prima facie the applicants have shown that the disputed fabrics are covered by Note 5(c) to Chapter 59, prima facie their goods cannot fall for classification under Heading 59.07. We therefore waive pre-deposit of duty and penalty and stay recovery thereof pending the appeal.

(Pronounced in Court)