9911796707
TMI Blog1983 (4) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-12-1974 rejected the contentions and confirmed the demand notice. The appeal against his order was rejected by the Appellate Collector by his Order dated 24-1-1976. It is against this order that the appellants filed a Revision Application to the Central Government which stands transferred to this Tribunal for disposal. 2. The main points put forth in the Revision Application (Appeal) are :- (a) Under the 1972 Budget, a new Item viz. 18-E was inserted in the Central Excise Tariff with effect from 17-3-1972 to cover yarn, all sorts, not elsewhere specified....... . Yarn containing 50% polyester and 50% cotton being manufactured by the appellants became liable to duty under the said item; (b) On 17-3-1972, the Central Government issued Notification No. 62/72 in pursuance of Rule 96W of the Rules in accordance with which duty on such yarn was payable at the time of clearing the fabrics at the rate (per square metre of the fabric) fixed in the notification; (c) The appellants, on application, were granted permission to avail of the special procedure in Rule 96W to discharge their duty liability on such yarn in terms of Rule 96W read with Notification No. 62/72 dated 17-3-1972 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Respondent, rebuted the appellants contention by submitting that the situation in the present case was analogous to one where the rate of duty leviable on a particular article was increased as a consequence of the budget proposals. In such a case, the increased rate would apply in respect of goods cleared after the coming into force of the increased rate. This was the situation in the present case too. The stage of clearance of goods is relevant in such cases. In this connection, he relied on certain judgments. Firstly, he referred to the judgment of the Bombay High Court in the Union of India Others v. Elphinston Spinning Weaving Co. Ltd. [1978 E.L.T. (J 680)] in which their Lordships had held that there is no warrant in the Central Excise Act or the Rules to spell out a construction that it is only the stage of manufacture or production of goods which attracts duty. Therefore, if on the date when the goods are removed from the place of manufacture, they are specified in the Central Excise Tariff Schedule, they cannot be removed unless duty is paid on them, even though such goods may have been manufactured when there was no excise duty on them. It was further held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressed these concessional rates of duty as so many Paise per sq. metre of the fabric made using such yarn. Rule 96-W(1) of the Central Excise Rules read as follows : 96-W. Discharge of liability for duty on payment of certain sum. (1) Having regard to the average production of cotton fabrics from one kilogram of cotton yarn or yarn falling under Item No. 18E of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) or the average prevailing prices of woolen yarn, the Central Government may by notification in the Official Gazette, fix from time to time a rate per square metre of the Cotton fabrics produced or per kilogram of the woolen yarn produced, as the case may be, subject to such conditions and limitations as it may think, fit to impose, and if a manufacturer whose application has been granted under Rule 96-V pays a sum calculated according to such rate, in the manner hereinafter laid down, such payment shall be a full discharge of his liability for the duty leviable on the quantity of cotton yarn (or yarn falling under Item No. 18-E of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) manufactured by him and used in the manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Item 18-E of the Central Excise Tariff shall be paid by the manufacturer along with the duty on fabrics in the manner prescribed under Rule 52 of the Central Excise Rules. Now, Notification No. 62/72-C.E., dated 17-3-1972 provided that yarn of the type manufactured by the appellants was entitled to the benefit of the Compounded Law Procedure and the rate of duty was prescribed at 20 paise per sq. metre of the fabrics made. It is evident that duty on yarn at the prescribed rate could be determined only after manufacture of and at the stage of clearance of the fabrics made out of such yarn. In the nature of things, therefore, the duty payable on yarn under the Compounded Levy Procedure could not be assessed at the time of removal of yarn within the factory for manufacture of fabrics but only at the time of clearance of the fabrics made out of such yarn. On 24-7-1972, by Notification No. 169/72-C.E., the Central Government made the type of yarn manufactured by the appellants ineligible to the Compounded Law rate laid down in Notification No. 62/72-C.E; dated 17-3-1972, with the result that such yarn had to pay duty at normal rate without reference to Compounded Levy Procedure.. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has arisen in the present case. In the case of the Union of India and Others v. The Elphinstone Spinning Weaving Mills Co. Ltd. [1978 E.L.T. (J 680)] the question which arose was whether textile fabrics impregnated or coated with preparations of cellulosic deviates or other artificial plastic material which were being assessed under Item No. 19 relating to cotton fabrics, at a particular rate of duty, would attract the higher rate of duty under the new specific Item 22-B inserted by the Finance Bill, 1968 to cover such goods, in a situation where the goods were manufactured prior to the introduction of Item No. 22-B but cleared thereafter. Their Lordships held that the mills were liable to pay duty of excise under Item 22-B and the fact that the goods might have been manufactured prior to that date was irrelevant. In the case of Alembic Chemical Works Co. Ltd. v. Union of India [1979 E.L.T. (J 258)] the question which arose was whether the stock of certain excisable goods which were manufactured at a time when an exemption was in force in respect of such goods was liable to pay excise duty in force at the time of removal of the goods from the factory when the exemption had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the subject yarn was cleared within the factory for the purpose of captive consumption for manufacture of Cotton Fabrics at a time when the Special Procedure was in force in relation to such yarn. In the normal course, therefore, the duty liability on the said yarn would be that computed in terms of the rate of compounded levy notified in Notification No. 62/72-C.E., dated 17-3-1972. The question of recalculation of the duty liability under the Special Procedure would have arisen only in the event of the rate notified under the Special Procedure undergoing a change. Such was not the case here. On 24-7-1972, the Special Procedure was made inapplicable to the type of yarn produced by the appellants, with the result that such yarn cleared on and after that date had to pay duty at the normal rate under the normal procedure. The appellants are not disputing, this position. However, what they claim is that they were liable to pay any duty in addition to what was payable at the rate notified under the Special Procedure. As we have seen earlier, during the currency of the Special Procedure, the provision contained elsewhere than in Section E-VI of the Central Excise Rules were not appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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