1982 (1) TMI 200 - CGOVT - Central Excise

Summary

Issues: Classification of blended polypropylene yarn for duty exemption under Notification No. 332 of 1977, violation of natural justice in review proceedings, initiation of review proceedings within the statutory time limit.

Classification of blended polypropylene yarn:
The case involved the classification of blended polypropylene yarn for duty exemption under Notification No. 332 of 1977. The petitioners had cleared the yarn based on a clarification from the Assistant Collector, but a subsequent show-cause notice demanded duty, contending that the yarn did not qualify for the exemption. The Assistant Collector initially withdrew the notice, classifying the yarn as polypropylene yarn eligible for the benefit. However, the Collector revised this decision, stating that blended yarn was not entitled to the exemption, leading to a duty demand. The Government observed that the predominance of non-cellulosic fiber was relevant only for classification under the Central Excise Tariff, and since the Notification referred to "polypropylene yarn" specifically, it meant 100% polypropylene yarn, not blended yarn. The Government further noted that blended yarn was known and sold in the market as such, distinct from pure polypropylene yarn, supported by separate exemption notifications for polypropylene yarn and blended polypropylene yarn.

Violation of natural justice in review proceedings:
The petitioners contended that the Collector violated natural justice by not granting them a hearing during the review proceedings, despite their request. The petitioners' advocate argued that principles of natural justice were breached, and the review proceedings were beyond jurisdiction as they were not initiated within one year of the Assistant Collector's clarification. However, the Government found that the Collector had provided an opportunity for a hearing, which the petitioners failed to avail. The Government held that the Collector was not obligated to grant another hearing, concluding that the Collector had complied with the principles of natural justice.

Initiation of review proceedings within statutory time limit:
Regarding the initiation of review proceedings within the statutory time limit, the petitioners claimed that the proceedings should have been initiated within one year of the Assistant Collector's clarification. The Government clarified that the review was not of the clarification but of the original order, and since the revision by the Collector pertained to the original order, it was initiated within the prescribed one-year period as per Section 35A of the Central Excises and Salt Act, 1944. Consequently, the Government rejected the petitioners' argument on the timing of the review proceedings.

In conclusion, the Government upheld the Collector's order, stating it was legally sound and declined to interfere with it. The judgment emphasized the distinction between polypropylene yarn and blended polypropylene yarn for duty exemption purposes, affirmed compliance with natural justice principles in the review process, and clarified the initiation of review proceedings within the statutory timeframe.