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TMI Blog1992 (3) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 2. The question which falls for determination in this petition filed under Articles 226 and 227 of the Constitution is the rate of duty leviable on partially oriented yarn of 132 denierage at the time of clearance from the factory gate. The facts giving rise to the filing of the petition are not in dispute and are required to be briefly stated to appreciate the grievance of the petitioners. 3. Petitioner No. 1 is a public limited company and its factory unit is situated at Patalganga where polyester filament yarn of the type known as partially oriented yarn (POY) is manufactured. The Company has also another factory situated at Naroda, Ahmedabad in the State of Gujarat, where the work of texturising is carried out. The POY manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eds on an erroneous basis and the base yarn which was cleared from the factory gate is tried to be levied with excise duty prescribed for base yarn which undergoes texturising process. To appreciate the submission of the learned Counsel, it is necessary to refer to Tariff Item No. 18(II) which deals with the item of man-made filament yarn. The sub-item indicates that non-cellulosic yarn other than textile is liable to pay duty at Rs. 85/- per kg. while textured yarn is liable to pay duty at the rate of Rs. 95/- per kg. The explanation to the entry sets out that textured yarn means yarn that has been processed to introduce crimps, coils, loops or curls along the length of the filaments and shall include bulked yarn and stretch yarn. The Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise duty payable is at the rate of Rs. 61.25 and it is not permissible for the department to claim that a higher excise duty which is payable in respect of texturised yarn will be levied and recovered. It is not in dispute that 52% of the base yarn manufactured at Patalganga factory is cleared at the factory gate. Mr. Varma, learned Counsel appearing on behalf of the department, submitted that the clearance by the petitioners from Patalganga factory is only to forward to the texturising unit of the petitioners at Naroda in the State of Gujarat. Mr. Varma submitted that even though the base yarn is a new product liable to excise duty when the petitioners remove such new product for undertaking texturising process at their own factory at Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uggests that the duty can be levied on base yarn on the basis that it will be used subsequently for manufacturing texturised yarn. We do not read the circular in a manner as understood by the department and in any way the circular cannot confer right upon the department to levy excise duty on the basis of texturised yarn when what is cleared from the factory gate is only base yarn. Mr. Dada also invited our attention to a decision of CEGAT where the Tribunal examined the dispute between the petitioners and the department. The petitioners were claiming that the liability to pay excise duty on the base yarn stands postponed till the texturised yarn comes into existence. The department resisted the claim by pointing out that the liability to p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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