1980 (11) TMI 53 - CGOVT - Central Excise

Summary

Issues:
1. Classification of woollen and acrylic spun yarn for duty rate determination.
2. Applicability of exemption notifications 133/77 and 280/77.
3. Interpretation of the term "partly" in Notification No. 133/77.
4. Effect of test reports on duty liability.
5. Validity of petitioners' contentions in light of the law.

Detailed Analysis:
1. The case involved the classification of woollen and acrylic spun yarn for duty rate determination. The petitioners had manufactured yarn from waste wool and cleared it at a nil rate of duty. Samples taken on different dates showed varying percentages of acrylic fibre. The Assistant Collector confirmed the duty demand as the petitioners failed to prove payment of duty on acrylic fibre as per the notification. The Appellate Collector upheld this decision.

2. The petitioners contended that they were eligible for exemptions under Notifications 133/77 and 280/77. However, during the personal hearing, they withdrew their claim under Notification 280/77 and sought the benefit of Notification 133/77. They argued that the word "partly" in the notification should be interpreted as "predominantly," considering the composition of the yarn. They also claimed that even if a small percentage of acrylic fibre was present, the duty should not apply.

3. The Government rejected the petitioners' interpretation of the term "partly" in Notification 133/77, stating that it should not be read as "predominantly." They emphasized that the proviso in the notification applied only to yarn spun entirely from acrylic fibre, not mixed fibre with a small acrylic content. The Government maintained that the duty liability at Rs. 10 per kg applied to the petitioners' yarn.

4. Regarding the effect of test reports on duty liability, the petitioners argued that the test report showing no acrylic fibre on 28-1-1978 should govern the period after 15-12-1977. However, the Government held that the test report's results could only have prospective, not retrospective, effect. The petitioners had the opportunity to request tests earlier if they believed no acrylic fibre was present.

5. The Government found the petitioners' contentions untenable and upheld the Appellate Collector's order as legal and correct. Consequently, the revision application was rejected, and the duty liability on the yarn was confirmed.