9911796707
TMI Blog2001 (1) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner mills would submit that the petitioner has got several spinning and weaving mills in the States of Tamil Nadu, Kerala and West Bengal and in Tamil Nadu, the Mills are at Madurai, Tuticorin and Ambasamudram; that one of the main merchandise manufactured and marketed by the petitioner company is "Coats Threads", which has universal recognition for its quality and durability; that specification of the threads varies from country to country and the threads manufactured for the Indian market is to the specification No. 60/1 whereas in some other countries the thread specification varies from No. 60/1, 60/2 and 60/3; that the threads exported to a particular country must satisfy the specification of such countries; that the threads and yarns are one and the same; that by multi-folding and more twisting, yarns are made into threads; that all over the world, the yarns and threads are treated as one and the same; that in the Central Excise Tariff Act also, the yarn is defined to include threads and no separate excise levy is made on the threads if yarn duty is paid. 3. The further contentions of the petitioner are that the petitioner company is a leading exporter of textil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding sewing thread of synthetic staple fibres) Nil that the above descriptions unambiguously, show that the yarn includes sewing threads because yarns are spun into threads that the subordinate officials misconstruing the provisions of the Act, ordered that the threads would sustain another incidence of excise duty though the threads are spun out of the duty paid yarn; that challenging the legality of the said decision, the petitioner filed writ petition and the same was being admitted and the authorities were restrained from imposing second incidence of duty on the threads; that the Government of India by various notifications, clarified that as per the Act, yarn includes sewing threads, doubled or multi-folded and the threads are manufactured out of the yarn falling under the Chapters 52, 54 and 55, on which the duty of excise has already been paid, the department authorities cannot levy another incidence of duty on the threads; that in view of the above notifications issued by the Government of India, the department themselves withdrew the proceedings initiated by them and hence, the writ petitions were withdrawn by the petitioner; that so far as the petitioner has multi-fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to be refunded and the contention in the show cause notice that Notification 197/62 does not allow any rebate as they are not sustainable in law; that on 28-9-1999, the first respondent also afforded personal hearing and passed orders on the very same day stating that proviso (1) of the Notification 197/62, dated 17-11-1962 stipulated on the excisable goods should be exported directly from the factory unless and otherwise provided in the Table to the said notifications or permitted by the Board and in the present case, the duty has been paid on the SS Polyesters yarn cleared under GP from one factory to another and the same has been converted to SS Polyester thread and exported and as per Rule 12 of the notification, the duty on the goods exported alone are liable for rebate and not the contents of the goods exported and on such reasoning, rejected the claim of rebate filed by the petitioner company. 6. The petitioner would further submit that they preferred an appeal to the Collector of Central Excise (Appeals), the second respondent herein, stating that the interpretation of the first respondent concerning Proviso (1) of Notification 197/62 is contrary to law and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hread by the petitioner, the Maritime Collector has rejected the rebate claimed, by his order dated 28-12-1989 for item Nos. 1 to 4 falling under AR4s Nos. 44, 52, 58 and 72 rejecting AR 4 Ne31 also; that it is true that yarn includes thread and duty is not liable on thread which is manufactured out of the duty paid yarn but the rejection of the rebate claim was only for the non-fulfilment of condition laid down in Notification No. 197/62, dated 17-11-1962 as amended, which is fully in accordance with law, wherein, the stipulation is that "the goods are to be exported after payment of duty in cash directly from a factory or a warehouse"; that inasmuch as the goods, namely threads, when cleared, have been exported from the petitioner's factory, the same is not entitled for payment of rebate under Rule 12 of the Central Excise Rules, 1944 as no duty was paid on the thread; that payment of excise duty of yarn by the sister concern of the petitioners is not relevant to the issue; that the rebate claim of exported excisable goods is regulated by Notification No. 197/62, dated 17-11-1962 as amended under Rule 12 of the Central Excise Rules, 1944. 8. The further contentions of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, Excise, for refund of excise duty, which also came to be rejected for refund on ground that the refund of excise duty is not for the export of sewing thread, but if it had been paid only in cotton yarn; that it is Central Excise Tariff Act, 1985 which is relevant; that under Chapter XI, all types of yarn and fabric and other products are classified; that under Section 11 of the Central Excise Tariff Act, 1985, various textiles and textile articles are classified; that Note 3 of Section XI lays down the Heading Nos. 52.03, 52.04, 54.04, 55.05 and 55.06, the 'sewing thread' means multiple folded or cabled yarn; that yarn includes sewing thread. In ascertainment of this, the learned counsel would cite a Division Bench judgment of this Court delivered in State of Tamil Nadu v. R.V. Krishniah Chetty and Sons reported in 1992 (Vol. 92) STC 262 wherein relying on two judgments delivered in Muthusavari Pillai & Sons v. State of Tamil Nadu (1977) 39 STC 359 and State of Tamil Nadu v. Vaithilingam reported in (1980) 46 STC 297, it has been held : "... that sewing thread does not lose its character as cotton yarn and continues to retain its identity and character as cotton yarn notwiths ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the petitioner that yarn is thread and yarn and thread are one and the same and therefore the duty paid on yarn manufactured at one mill even after getting converted into thread in the other mill would become entitled to get the rebate, is unacceptable. The learned counsel would also cite a judgment of the Tribunal delivered in Vardhman Spg. & Gen. Mills Ltd. v. Collector of C. Ex., Chandigarh reported in 1999 (105) E.L.T. 121 (Tribunal) wherein it has been held: "We have carefully considered the pleas advanced from both sides. In our view, while there is substantial force in the legal plea of the Revenue that duty is to be charged on any excisable goods in the form and on the value (if it is ad valorem) prevalent at the time of removal of those goods from the factory of manufacture of those goods but so far as yarn is concerned, direct judgment of the Apex Court in the matter Banswara Syntex [1996 (88) E.L.T. 645] decides the controversy in favour of the appellants. No doubt, both J & K Cotton [1987 (32) E.L.T. 234 (S.C.)] and Bhilwara Spinners [1996 (82) E.L.T. 442 (S.C.)] dealt with deemed removal of yarn in a continuous process of manufacture of fabrics, but Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t only at the yarn stage 16/1 and hence the petitioner is not eligible to get the rebate and would pray to dismiss the writ petition. 16. In clarification, the learned senior counsel for the petitioner would further submit that two Division Benches of this Court held that thread is yarn respectively reported in (1) Madura Mills Company Limited v. Government of Madras (1970) 25 STC 407 and (2) 1992 (Vol. 92) STC 262 (supra) and also by a single Judge of this Court in W.P. No. 15469 of 1990, dated 24-9-1999. 17. In clarification, the learned counsel for the respondents would submit that the Supreme Court has not gone into the question of classification and would rely on the judgment of the Apex Court reported in 1988 (37) E.L.T. 471 (S.C.) supra. 18. In consideration of the pleadings by parties and having regard to the materials placed on record and upon hearing the learned counsel for both, what comes to be known is that all the three respondents have uniformly rejected the case of the petitioner claiming refund of the excise duty paid at ₹ 6,91,585.59 ps. and ₹ 49,330.51 ps. paid by the petitioner company in case of five export duties as given in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warehouse' and that inasmuch as the goods viz., threads, have been exported from the petitioner's factory, the same is not entitled for payment of rebate under Rule 12 of the Central Excise Rules, 1944. 21. There is no controversy regarding the manufacture of the items of goods enumerated at the end of Para 1 of this order forming part of the prayer column of the writ petition have been exported by the petitioner on different dates to Indonesia in the name of 'Coats Threads'. There is also no controversy so far as the said items having suffered excise duty, when they were in the form of cotton yarn. There is also no controversy that the threads are made of cotton yarns by multi-folding and more twisting and for the purpose of Central Excise Tariff Act also, the yarn is defined to include threads and no separate excise levy could be collected on the threads if yarn duty is paid. Therefore, the arguments advanced on the part of the petitioner that the threads are yarn and they are one and the same and just for the simple reason that the yarn is made into thread, the same in the form of thread, does not attract the second incidence of duty, in the form of thread and the excise d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty need be paid on the threads and therefore the claim of the petitioner that yarn is thread and they are one and the same and if duty is paid in any one of these forms, the other form does not attract payment of excise duty. This position has been made clear not only by the two Division Bench decisions cited on the part of the petitioner but also by the Apex Court judgments cited on the part of the petitioner and this position is also acceptable on the part of the respondents. But, their arguments are that since the excise duty is paid in the form of yarn by the sister concern of the petitioner and the goods are to be exported after payment of duty direct from the factory or a warehouse, the respondents claim that as per the notification, those goods that is the yarn which suffered the tax in the sister concern are not exported from the petitioner's factory but different items viz., threads and since no duty has been paid on the threads, which directly come out of the factory, the petitioner is not eligible to claim the rebate. Therefore, the relevancy and the legality of this argument advanced on the part of the respondents needs dissection. 25. There is no point in mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any loss or that the petitioners have circumvented or violated any law and therefore the denial of the rebate by the respondents is not only unreasonable and arbitrary but erroneous as well. No valid or acceptable reason has been offered on the part of the respondents to reject the claim of the petitioners excepting to misinterpret the meaning of the rule. Interpretations must only render clarity and cannot deny the due of the petitioner. 26. Whether the yarn is from the petitioner mills or from its sister concern is immaterial. Relevancy lies whether that yarn, whether in the form of yarn or thread or in any other form, within the permissible limits of law, has suffered the excise duty or not? Once it comes to be known that it has suffered the excise duty, automatically, the owner of the same is entitled to get the rebate as claimed on the part of the petitioners in the case in hand. After all, the petitioners have got the consent letter from the sister concern also and have sent it along with the claim form. When it is the admitted case on the part of the respondents that no separate duty is to be paid for the threads even if it is converted from No. 60/1 to that of No. 60/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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