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TMI Blog1990 (10) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to be decided in this case is whether interest on Central Excise duty on the yarn used in the manufacture of cotton fabrics exported out of India under Bond is recoverable according to the provision of Rule 49A of the Central Excise Rules. The department has raised demand for interest. The Collector (Appeals), by the impugned order has restricted the demands for a period of six months. The order has been challenged by the appellants in this appeal. 2A. Rule 49A of the Central Excise Rules, 1944 reads as follows :- 49A. Collection of duty leviable on cellulosic spun yarn and cotton yarn alongwith the duty on cotton fabrics - Where a manufacturer, - (i) who manufactures cellulosic spun yarn falling under Item No. 18III(i) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fabrics are cleared without payment of duty leviable thereon for processing under Rule 36D, the duty payable on such cellulosic spun yarn and cotton yarn plus the interest at the rate of three per cent thereof may be paid at the time of clearance of such fabrics after processing from the composite mill or the factory which processes such fabrics, as the case may be). Explanation. - For the purpose of this rule, Composite mill means a manufacturer who is engaged in spinning of cotton yarn or weaving or processing of cotton fabrics " with the aid of power and has a proprietary interest in at least two of such manufacturing activities. 3. Rule 13 of the Rules deal with cases of goods which are exported under bond without payment of duty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid on fabrics. It is a facility given to pay the duty on the yarn, used in the manufacture of fabrics at the time of payment of duty on fabrics. However, while providing for determent of payment of duty on yarn certain conditions are imposed one of which is that the manufacturer has to pay the duty with interest. 8. Rule 52 provides that when the manufacturer desires to remove the goods on payment of duty from the factory or store-room or other places of storage he can assess the duty, pay it and get the clearance. It may be pointed out that Rule 52 requires the proper officer to make assessment of amount of duty due on the goods intended to be removed by the manufacturer on payment of duty. In other words Rule 52 speaks of removal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Rule 13. Looking it from a different angle duty payable on fabrics is nil. When duty is not payable on fabrics duty is also not payable on the yarn used in the fabrics in view of the Explanation 2(ii) to Rule 13. When nil duty is payable the question of payment of interest on nil duty does not arise. 11. In this context we may also refer to the language used under Rule 49A(l)(b), 49A(2)(b). It says when cotton fabrics are cleared (unprocessed) the yarn duty payable shall be the appropriate duty payable on such cellulosic spun yarn or cotton yarn or both as the case may be plus 1 /2% of the duty payable on such cellulosic spun yarn or cotton yarn or both as the case may be by way of interest on the amount of yarn duty. Similar is the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for payment of duty for home consumption but for export under Rule 13, the recovery of duty on yarn is waived under Rule 13 along with the duty on fabrics. Now, the Special Excise Duties are levied by way of a percentage of the basic excise duty leviable under the Central Excise Tariff. Where, therefore, the basic excise duty is nil , interpretation in levying the additional duty of excise on the textiles and textile articles under the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. On the same analogy, since the duty on yarn is nil, the interest is also nil. Therefore, as construed in this manner, Rule 49A does not authorise the department to charge interest where fabrics are exported without payment of duty under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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