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TMI Blog1989 (9) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... area of the fabric cleared on or after 24-7-1972. The duty cannot be determined at the rates specified for yarn under Item 18-E as applicable on the dates of clearance of the fabric manufactured by using the yarn. To hold otherwise would really mean holding that the incidence of duty on the yarn under the notification arises only on the date of clearance of the manufactured fabric. This, in our view, is not the effect of the notification No. 62/72, on 17-3-1972. Appeal dismissed. - 2436-37 of 1987 and 4198 of 1984 - - - Dated:- 8-9-1989 - S. Ranganathan and N.D. Ojha, JJ. [Judgment per : Ranganathan, J.]. - These are three appeals by the Collector of Central Excise. Two of them relate to Ahmedabad and one to Bombay. The Ahmedabad appeals are in the case of M/s. Ashoka Mills Ltd. and the Bombay appeal is in the case of M/s. Mafatlal Fine Spinning and Manufacturing Co. Ltd. These appeals raise a very interesting question. 2. The assessee respondents are companies manufacturing yarn and cotton fabrics, the manufacture of yarn being a step in the process of the manufacture of cotton fabrics. Cotton fabrics (which expression included all fabrics containing more than 40% by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice in writing to the proper officer of his intention at least one week in advance; and if he fails to give such notice he shall be precluded from availing himself of such provisions for a period of 6 months from the date of such failure. 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 18-E of the First Schedule to Central Excises Salt Act, 1944 ( 1 of 1944) or the average prevailing prices of woollen 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 woollen 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 18-E of the First Schedule to the Central Excises and Salt Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1944 and of the description specified in Column (2) of the Table hereto annexed, shall be the rate specified in the corresponding entry in Column (3) of the said Table. THE TABLE S.No. Description of yarn Rate (1) (2) (3) Paise per square metre of the fabric made. 1. Yarn used in making super fine fabrics 20.00 2. Yarn used in making fine fabrics. 12.00 3. Yarn used in making medium a fabrics 6.00 4. Yarn used in making medium a fabrics. 4.40 5. Yarn used in making coarse fabrics. 2.20 6. Yarn used in the manufacture of cotton fabrics generally described as Malimo-type fabrics or fabrics in which warp and weft yarns are connected and fastened together by chain stitches baned against each other. 4.40 7. Yarn used in making embroidery in the place in strips or in motifs. The duty for the time being leviable on yarn contained in the base fabrics if not already paid. 8. Yarn used in making fabrics impregnated or coated with preparation of cellulose derivatives or of other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides that the duty would be paid along with the duty payable on the fabrics under Rule 52. This clearly shows that it is not incidence of liability that is shifted but only the collection of the duty. 5. The purpose of the rules and notifications may be briefly set out thus. As already mentioned both yarn and fabrics are individual items exigible to duty. Two levies on the yarn as well as on the cotton fabrics, on different bases, may not only impose an undue burden on the manufacturer but may also unnecessarily complicate the process of collection of duty at two stages. The Act, therefore, envisages what has been described as a scheme of "compounded levy". Under this scheme, the excise duty on the yarn is collected only as and when the manufactured goods, namely, cotton fabrics are cleared from the factory and no duty is collected at the stage of the production or manufacture of yarn. The duty paid as per this notification is treated as a full discharge of the assessee's liability for the duty leviable on the yarn used by the assessee for manufacture of fabrics in its factory. To sum up briefly, Rules 96-V and 96-W, together with the notification issued thereunder are concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the assessee following its earlier decision dated 2-4-1983 in M/s. Raipur Manufacturing Co. v. Collector of Central Excise, Ahmedabad [1988 (33) E.L.T. 542]. It held that the yarn cleared for captive consumption during the period from 17-3-1972 to 23-7-1972 in terms of the special procedure was entitled to the benefit of the rates fixed under Notification No. 62/72-C.E., dated 17-3-1972 and that no further duty was payable on that quantity of the yarn. A consequential refund to the appellants was directed. We notice that this order of the Tribunal was followed by another Bench of the Tribunal in its order dated 20-7-1983 and this decision had been reported much earlier as Crown Spinning Manufacturing Co. Ltd. v. Collector [1983 (14) E.L.T. 2433]. The Collector, Central Excise has preferred these appeals. 8. We have come to the conclusion that the view taken by the Tribunal has to be upheld. `Yarn' is an excisable commodity and it is common ground before us that, normally and but for the special procedure and notification, duty thereon is leviable at the point of production and clearance for captive consumption. On that view, the duty attaches itself at the point of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn are cleared. 10. We do not think that the words of the proviso can be extended to cover a case where the notification itself has ceased to apply by the date of clearance of the fabric. To apply the proviso to such a case would result in its applicability to a totally different situation. It would involve a comparison of unlikes. It would mean the substitution of one set of rates prescribed in connection with a special procedure on the basis of the area of cloth by another set of rates applicable to yarn in the normal course which is to be worked out on the basis of weight. This involves a mix-up of two totally different schemes of levy of duty on yarn. We do not think it is correct to place this construction on these provisions. In our opinion, the normal rates de hors the notification will apply only in respect of yarn produced on or after 24-7-72 and not to yarn produced between 17-3-72 and 23-7-72. The assessees having paid at the normal rates in respect of the latter period were rightly held entitled to seek a refund. 11. We may also point out that the best that can be said for the department is that the system of compounded levy ceased only on 24-7-1972. This means that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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