1984 (9) TMI 184 - AT - Central Excise

Summary

Issues:
- Whether the appellants are liable to pay excise duty on base yarn they dye and return?
- Whether the duty demanded by the Department is valid?
- Burden of proof regarding payment of excise duty on base yarn.

Analysis:

1. The appeals involved common questions of law as the appellants were engaged in dyeing yarn received from traders and returning it after processing. The Department issued show cause notices for differential duty levied on the base yarn. The appellants contended they were not manufacturers of base yarn and should not be liable for excise duty on it.

2. The appellants argued that they were not manufacturers of base yarn and could not be held liable for excise duty on it. They claimed the duty had already been paid by the suppliers. The burden of proving duty payment was on the Department, and the appellants had submitted relevant documents and relied on previous Tribunal decisions to support their case.

3. The Department argued that the duty leviable on base yarn should be paid by the appellants if not already paid by the manufacturer. They emphasized the onus of proof on the assessee to show duty payment on base yarn and cited relevant case laws to support their position.

4. The Tribunal noted that the appellants received acrylic yarn from traders, processed it, and cleared it on payment of duty. Previous Tribunal rulings supported the view that those texturizing plain yarn were not liable for base stage duty. The Tribunal agreed that the liability to pay duty is on the manufacturer of excisable goods, and the appellants were not manufacturers of base yarn.

5. The Tribunal held that the Department failed to establish that duty on base yarn had not been paid. The appellants had shown evidence that they received base yarn from the market, and the Department did not refute this evidence. The onus of proving duty non-payment on base yarn shifted to the Department, and the appellants had discharged their initial burden.

6. The Tribunal rejected the Department's contention that duty for the time being leviable should be paid by the appellants. They emphasized that once the initial burden of proof was met by the assessee, there was no justification for collecting duty again. The Tribunal set aside the impugned orders and allowed the appeals, finding the lower authorities' approach unjustified.

In conclusion, the Tribunal ruled in favor of the appellants, holding that they were not liable to pay excise duty on base yarn they processed and returned, as the duty on base yarn was deemed to have been paid by the suppliers. The Department failed to prove otherwise, and the burden of proof shifted to them. The Tribunal emphasized the importance of avoiding double taxation and set aside the Department's demands.