2005 (9) TMI 584 - AT - Central Excise

Summary

Issues:
- Duty imposition on texturised yarn under Chapter Heading 5403 post withdrawal of exemption notification in Budget 1994-95.

Analysis:
The appeals before the Appellate Tribunal CESTAT, Mumbai were filed by the Revenue against the order of the Commissioner (Appeals), Surat, concerning the duty imposition on texturised yarn under Chapter Heading 5403. The duty was reimposed in the Budget 1994-95 by withdrawing a notification that exempted the texturised yarn from payment of duty. The duty became payable from the midnight of 28-2-1994, as per Notification 26/94 dated 1-3-1994. The respondents had cleared the texturised yarn on 28-2-1994 before midnight. The Commissioner (Appeals) set aside the lower authority's order, citing lack of evidence to prove the timing of goods removal. He noted that the goods were removed around 10 to 10.30 pm on 28-2-1994, and the minimal duty amount suggested the respondents' lack of awareness regarding the budgetary changes. The Commissioner relied on a Supreme Court decision stating that if the levy was not present when the goods were manufactured, it cannot be imposed at the removal stage.

Upon review, the Appellate Tribunal found that the goods were excisable on 28-2-1994, as the exemption from duty on texturised yarn was simply withdrawn in the budget, indicating their excisability. The Tribunal disagreed with the Commissioner's reliance on the Supreme Court decision, as it did not pertain to excisable goods. Referring to the case of Wallace Flour Mills Co. Ltd. v. CCE, the Tribunal emphasized that duty rates applicable on the removal date of excisable goods prevail, even if produced during an exemption period. This principle applied to the present case, where duty was levied on previously exempted texturised yarn, removed on the budget day. Consequently, the Tribunal set aside the Commissioner's order and allowed the appeals filed by the Revenue.