1981 (7) TMI 67 - HC - Central Excise

Summary

Issues:
Interpretation of excise duty on blended yarn at different manufacturing stages.

Analysis:
The petitioners, a joint stock company manufacturing blended yarn, challenged the imposition of excise duty on the yarn at the stage after sizing, rather than at the spindle point before sizing. The dispute arose when the Excise Department decided to levy duty post-sizing, leading to correspondence and show cause notices to the petitioners. The petitioners contended that sizing was not integral to the manufacturing process of yarn, and duty should be levied at the spindle point. The Government of India, in two separate cases, supported the petitioners' argument that duty should be charged based on the form and weight of the yarn at the spindle stage, especially when intended for captive consumption for weaving purposes. The court, relying on these government decisions, quashed the notices issued by the Excise Department, ruling in favor of the petitioners. The judgment emphasized that the decisions by the highest authorities on excise duty assessment were binding, and there was no contradictory judgment presented by the respondents. As a result, the court allowed the petition, absolved the petitioners from the duty payments demanded in the notices, and discharged the bank guarantee provided by the petitioners during the legal proceedings.