1985 (6) TMI 113 - AT - Central Excise

Summary

Issues:
1. Duty payment on non-cellulosic spun yarn based on sized weight.
2. Demand for differential duty.
3. Validity of refund claim.
4. Interpretation of Section 51 of the Finance Act, 1982.
5. Previous High Court judgments on duty payment.

Analysis:
1. The appellants manufactured non-cellulosic spun yarn and paid duty on the unsized weight of the yarn. A demand for differential duty was raised by the Department based on the sized weight of the yarn. The Assistant Collector confirmed the demand, which was upheld by the Appellate Collector, granting partial relief under Rule 9(2) for a specific period. The appellants filed a revision application before the Central Government, seeking a refund alongside.

2. The Assistant Collector issued a show cause notice to reject the refund claim after the enactment of Section 51 of the Finance Act, 1982, which gave retrospective effect to amendments of Rules 9 and 49. The Assistant Collector rejected the refund claim, stating that the previous order relied upon by the appellants became null and void due to the amended Section 51(2). The Appellate Collector upheld the Assistant Collector's decision.

3. The Tribunal observed that Section 51 of the Finance Act, 1982 aimed to clarify the charge of duty on deemed removals for captive consumption, irrespective of the manufacturing process. The dispute between the appellants and the Department was solely on whether duty should be based on the sized or unsized weight of the yarn. The Tribunal noted that the relief granted by the Appellate Collector's previous order became final and was not reviewed by the competent authority.

4. Three High Court judgments were cited in favor of the appellants, supporting the duty payment based on the unsized weight of the yarn in cases where yarn is spun and removed for weaving in an integrated process. The Tribunal, considering these judgments and the interpretation of Section 51, set aside the impugned order, allowed the appeal, and directed the grant of a consequential refund to the appellants.

In conclusion, the Tribunal ruled in favor of the appellants, emphasizing the duty payment on the unsized weight of the yarn and granting the consequential refund based on the previous High Court judgments and the interpretation of Section 51 of the Finance Act, 1982.