1995 (5) TMI 29 - SC - Central Excise

Whether the blended yarn in which polypropylene fibre predominates was or was not entitled to benefit under Central Excise Notification No. 322/77-C.E., dated 1-12-1977? Held that - The contentions made on behalf of the appellant cannot be upheld in the facts of this case and in view of the wording of the notification dated 1-12-1977 as it exempts from duty polypropylene spun yarn falling under T.I. 18E, but not blended spun yarns containing polypropylene. Admittedly, the blended yarn manufactured by the appellant, containing 52% polypropylene and 48% viscose, will fall within the T.I. 18E, coming within the ambit of the tariff description Spun (discontinuous) yarn in which man-made fibres of non-cellulosic origin, other than the acrylic fibre, predominate in weight . But blended yarn in which polypropylene predominates in weight has not been exempted. It is for the assessee to establish that the goods manufactured by him come within the ambit of the exemption notification. Since it is a case of exemption from duty, there is no question of any liberal construction to extend the term and the scope of the exemption notification. Such exemption notification must be strictly construed and the assessee should bring himself squarely within the ambit of the notification. No extended meaning can be given to the exempted item to enlarge the scope of exemption granted by the notification. Against assessee.

Summary

Issues:
Interpretation of Central Excise Notification No. 322/77-C.E., dated 1-12-1977 regarding the entitlement of blended yarn in which polypropylene fiber predominates to benefit under the notification.

Analysis:
The case involved a dispute over whether blended yarn containing 52% polypropylene and 48% viscose fiber manufactured by the appellant was entitled to benefit under Central Excise Notification No. 322/77-C.E., dated 1-12-1977. The Tribunal, after a difference of opinion between its members, held that the term 'polypropylene spun yarn' in the notification referred to yarn spun solely out of polypropylene fibers and not blended yarn. The appellant argued that the exemption should be construed liberally to include blended yarn where polypropylene predominates in weight. The appellant contended that the blended yarn should be considered polypropylene yarn as polypropylene was the predominant fiber. However, the court held that the exemption under the notification was limited to polypropylene spun yarn and did not extend to blended yarn where polypropylene predominates. The court emphasized that the appellant failed to establish that the blended yarn was known as polypropylene yarn in the market, and the exemption notification did not cover blended yarn with polypropylene predominance.

The court referred to a previous judgment which explained that the classification of composite yarn depended on the predominant fiber in weight. In this case, since polypropylene constituted 52% of the blended yarn, it could be classified as polypropylene yarn for taxation purposes. However, the court reiterated that the exemption notification specifically mentioned polypropylene spun yarn and did not include blended yarn with polypropylene predominance. The court emphasized that the exemption notification must be strictly construed, and the appellant needed to squarely fit within its scope to claim the benefit. The court also noted that subsequent notifications were issued separately for polypropylene yarn and blended yarn, indicating a distinction in treatment.

In conclusion, the court dismissed the appeal, stating that the blended yarn manufactured by the appellant, despite polypropylene predominance, did not qualify for the exemption under the Central Excise Notification No. 322/77-C.E., dated 1-12-1977. The court highlighted the importance of strictly interpreting exemption notifications and the need for the assessee to meet the specific criteria outlined in such notifications to claim the benefit.