1997 (12) TMI 329 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for the benefit of Notification 17/94 regarding sewing thread under Tariff Heading 55.04.
2. Interpretation of the term "yarn" in the context of the notification.
3. The effect of subsequent amendments to Notification 17/94.
4. Clarificatory nature and retrospective effect of subsequent notifications.

Issue-wise Detailed Analysis:

1. Eligibility for the benefit of Notification 17/94 regarding sewing thread under Tariff Heading 55.04:
The primary issue in the appeal concerns the eligibility for the benefit of Notification 17/94 in respect of sewing thread falling under Tariff Heading 55.04. Initially, the appellants were granted the benefit for sewing thread manufactured from yarn under Tariff Heading 55.04. However, a subsequent notification introduced a new item at Sl. No. 17, explicitly including "sewing thread," which led the authorities to believe that sewing thread was not covered under the original Sl. No. 13 of Notification 17/94.

2. Interpretation of the term "yarn" in the context of the notification:
The appellants argued that sewing thread is a variety of yarn and should be covered under the term "yarn" in the notification. They cited a judgment from the Madras High Court in the case of State of Tamil Nadu v. R.V. Krishniah Chetty and Sons, which held that sewing thread is no different from cotton yarn. They contended that the term "yarn" in the notification should include sewing thread, as it does in the tariff entry.

3. The effect of subsequent amendments to Notification 17/94:
The department argued that the specific inclusion of "sewing thread" in the subsequent notification indicated that it was not originally covered. They referred to the Supreme Court judgment in Rajasthan Spinning Mills, emphasizing the need for strict interpretation of notifications. The department asserted that the amendment to include sewing thread showed legislative intent to rectify an earlier exclusion.

4. Clarificatory nature and retrospective effect of subsequent notifications:
The tribunal considered whether the subsequent notification was clarificatory and had retrospective effect. They referred to the Fair Childs Dictionary of Textiles, which defines sewing thread as a variety of yarn. The tribunal found that technically, sewing thread is a type of yarn, and the modification in the notification was to remove any ambiguity. They cited the case of Apex Steels Ltd. v. CCE, where a similar issue was resolved by treating the subsequent notification as clarificatory.

Conclusion:
The tribunal concluded that sewing thread should be considered as yarn for the purposes of the notification. They determined that the subsequent notification, which explicitly included sewing thread, was clarificatory and did not change the original intent. The appeal was allowed, granting the benefit of Notification 17/94 to the appellants for sewing thread under Tariff Heading 55.04.