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TMI Blog1984 (1) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... 68. 3. The controversy arose when the classification list, which was filed on 2-5-1978 indicating all these doubled or twisted yarns as assessable under T.I.68 was not approved as submitted, and by order dated 12-9-1978, the Assistant Collector directed that revised classification list be filed indicating these products, known as doubled yarns , to be falling under T.I. 18B(ii) of the CET, and that duty be paid accordingly. 4. Whereas, it would appear that revised classification list, as directed, was filed under protest and so were price lists, and a representation to the Collector was also made against this revision of the classification by the Assistant Collector, no statutory appeal against the order of the Assistant Collector was taken to the Appellate Collector. However, inspite of no decision having been taken expressly by the Collector on the appellants representation, the appellants continued clearance of the goods by paying excise duty as under T.I.68 apparently without any objection, and with the concurrence of the concerned excise authorities. 5. This position prevailed till a notice was issued to the appellants; firstly, on 22-1-1979 calling upon to show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, on the assumption that doubled or twisted yarn, fell within the category of fancy yarn , which was not elsewhere specified, and inspite of the fact, that all the constituent yarns had already paid duty, further excise duty was paid under T.I.68, but now they raised dispute even in relation to the very liability to excisability, asserting that no further process of manufacture had taken place, and what they had done was merely doubling of already duty paid spun yarn. It was further pleaded that after they had received intimation of Assistant Collector s decision to categorise some of the varieties of the yarn manufactured by them as excisable under Item 18B(ii), they had submitted a representation to the Collector and after filing revised classification list under protest, continued clearing the goods under T.I. 68 with the approval of the excise authorities, and so the demands, now made were barred by time. Besides, repudiating their liability to pay any further duty, they rather claimed set off for the amount of duty already paid on the single spun yarns, which had gone into the making of the doubled yarn, which was the subject matter of the disputed levy. 8. All the demands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng not been challenged when the Assistant Collector had passed order on the classification list on 12-9-1978, the challenge now became barred by time, could not now be raised. The appeals were thus held to be not deserving any consideration on merits, as in his view, the protest to the Assistant Collector or a representation to the Collector (Executive) relied upon by the appellants could not serve as appeal to the statutory authorities and that the classification issue had to be treated as standing concluded. 10. Party s objection as to the demands or part thereof being barred by time to the extent they were beyond the period of six months from the date of payment of duty, alleged as short levied, was rejected on the view that the goods had been admittedly cleared after paying rate of duty lower than those payable, per the approved classification list, and to that extent there had been clearances and removal of goods, at unapproved rates, which was tantamount to unauthorised removal, in contravention of the provisions of Rule 9 of the Rules and consequently extended time limit of five years was available to the Department, under Rule 10( 1) (a) and (c) of the Rules. The appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd as contained in communication dated 6-7-1979. They also place reliance on Trade advice, issued by Jaipur Collectorate to the effect that all types of doubled yarn where different constituents falling under Item 18 III or Item 18E had been used would be classifiable under T.I. 68, and on that basis also the re-classification subsequently adopted by the Department is assailed. 12. Shri C.L. Sawhney, Consultant argued the appeals on behalf of the appellants whereas Shri K.D. Tayal, SDR represented the respondent. The matter was argued on two dates because on the first hearing, apart from paucity of time, certain clarifications were required from the respondent s side to which we would advert later, for which the learned SDR asked for some time. 13. The arguments convassed by the learned Consultant on the two hearings were substantially the same. On the first hearing, he mostly outlined the process whereby the twisted spun yarn was prepared, laying stress on the fact that the appellants were buying duty-paid spun yarns of different varieties, and that the process undertaken by them was merely that of doubling and twisting, and that the Department itself had allowed clearances un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as there had been no suppression or mis-statement on the part of the appellants, so as to justify application of extended time limit. He urged that the case being of plain short-levy on Department s own showing, when the appellants had been placing all relevant facts and material before and at the time of clearances, before the concerned authorities; no more than six months period, as contemplated by Rule 10 was available and that would be calculated from the date of issue of respective notices. He further added that the communication described as corrigendum issued on 6-7-1979 was tantamount to fresh notice in so far as a substantial change has been made in the Department s stand by converting the tariff description of certain products from 18B(ii) to 18E and consequently in the event of it being held that some of the products were classifiable under T.I. 18E, the duty demand has to be considered in respect thereto, as if it had been made for the first time with effect from 6-7-1979, and consequently the period of six months permissible to the Department will be calculated with reference to his date, and date back from 6-7-1979 in respect to the period covered by this notice; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered as barred by time. 19. After Shri Tayal concluded his arguments, Shri Sawhney again submitted on behalf of the appellants that it was open to the Tribunal, and he would rather solicit, that the Tribunal determine the correct classification on the basis of the facts and further that on the lines of the view already taken in the case of General Industrial Society Ltd. (supra), relief by way of set-off, may be allowed to the appellants in case it is found on record that the duty has been charged twice on the same variety of yarn, under the same tariff entry first, at the constituent stage, and then at the final stage. 20. We have given very careful thought to the controversies raised in these appeals. The appellants have not in so many words pressed the contention that the process adopted by them, in doubling or twisting of the yarn, did not amount to manufacture. Otherwise also, we find this issue concluded by our decision in case of Aditya Mills Ltd. (supra) against which the learned Consultant for the appellants did not urge any argument. We further find that although the learned Consultant for the appellants is aware of our decision in the case cited as General ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before that in the case; reported as 1983 (14) E.L.T. 2491 (CEGAT), (Gaekwar Mills Ltd., Bomaby v. Collector of Central Excise, Baroda), to the effect that the particular constituent should comprise more than 50% of the weight of the fabric, in order to meet the predominance test. It has further to be borne in mind, that in view of the peculiar situation in this case where some of the constituents are in equal ratio of 50:50, then in terms of the Explanation appended to T.I. 18E read with Explanation III attached to T.I. 18, where both the constituents are of equivalent weight, then such one of the fibres which carries higher/highest rate of duty would determine the characteristics of the resultant yarn. 24. Basing our conclusions on this criteria, and the given percentage per classification lists; which percentage is reproduced in the notices to show cause, as well as respective orders, we hold that the resultant yarn having polyester/acrylic in the ratio of 50: 50 will fall under Item 18E in the context of Explanation attached to this entry. The yarn having composition as polyester: viscose : acrylic in the ratio of 24 : 26 : 50 would not fall either under the category of cellu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 4-7-1979 covering the period October 1978 to March 1979, can save the demand, from 5-1-1979 onwards, going back six months, from the date of the Notice. We come to this view; namely, that only six months period is available to enforce the demands, because of the fact that we do not find it to be a case of any suppression or even mis-statement of facts, so as to attract Proviso (a), appended to Rule 10 of the Rules. It is manifest on record that the party has been filing classification lists, giving all the details of the constituent yarns, and the percentages thereof, and also setting forth their view that they were liable to pay duty under T.I.68, which was accepted by the Department, and clearances allowed accordingly. It is thus on face of record, a case of plain short-levy owing to error or mis-construction on the part of the concerned Excise authorities, and we cannot subscribe to the Department s stand that extended period of five years, is available to them. 29. Both the appeals are disposed of in the light of the foregoing findings, with the result that whereas in the case of Appeal No. ED(SB)(T) 940/83-D, the order of the lower authority confirming the Show Cause N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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