1984 (5) TMI 162 - AT - Central Excise

Summary

Issues:
- Liability of differential duty on base acrylic yarn
- Burden of proof regarding payment of duty on base yarn
- Interpretation of Tariff Item 18(ii) and Notification No. 125 of 1975
- Applicability of previous judgments in similar cases
- Onus of proving duty payment on base yarn
- Justification for not producing proof of base duty payment
- Proper approach by lower authorities in demanding differential duty
- Consideration of remanding the matter to verify duty payment
- Decision on the demand of differential duty
- Dismissal of cross objection filed by the department

Analysis:

The case involved a demand for payment of differential duty on base acrylic yarn by M/s. Decent Dyeing Company for the period May 1976 to July 1976. The appellant had cleared texturised yarn at Rs. 10 per kg under Notification No. 125 of 1975, while the differential duty demanded was at Rs. 24 per kg, leviable on the base yarn. The lower authorities confirmed the demand, leading to the appeal against the order of the Collector (Appeals).

The main contention raised by the appellant was that duty on the base yarn is payable by the manufacturer of the base yarn, and the burden of proof regarding payment of duty lies with the department. The appellant relied on previous judgments to support their argument. On the other hand, the department argued that the burden of proof was on the appellant to show payment of duty on the base yarn.

Upon careful consideration, the Tribunal noted that the duty payable on textured yarn produced from base yarn was based on the duty leviable on the base yarn plus an additional amount. The Tribunal referred to a previous judgment where it was decided that duty on the base yarn could be demanded from the manufacturer, and purchasers could assume the duty had been paid. Therefore, the burden of proving non-payment of base duty rested with the department, not the appellant.

The Tribunal found that the lower authorities had erred in placing the burden of proof on the appellant regarding base duty payment. The appellant was justified in presuming that the manufacturer had paid the base duty. The Tribunal also highlighted that the department had not verified relevant facts provided by the appellant, which was improper.

Regarding the possibility of remanding the matter to verify duty payment, the appellant clarified they were not liable to pay the base duty. Consequently, the Tribunal concluded that the demand for the differential duty could not be upheld, allowing the appeal and providing relief to the appellant. The cross objection filed by the department, lacking any specific relief, was dismissed as the appeal itself was allowed.