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TMI Blog1973 (2) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... on the manufacture of cotton yarn with effect from 1-3-1961. Item No. 18-A reads as follows :- Cotton Twist, Yarn and"18-A. Thread. All sorts, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power - (1) of 35 or more counts : Fifteen naya paise per kilogram. (2) of less than 35 counts: Ten naya paise per kilogram. Explanation :- For multiple-fold yarn "count" means the count of the basic single yarn." On the same day i.e. 1-3-1961 the Central Government, in exercise of the powers conferred under Rule 8(1) of the Central Excise Rules, 1944 issued Notification No. 48 of 1961, dated 1-3-1961 exempting cotton yarn of count exceeding 10 but not exceeding 40, if issued out of the factory in hanks from the whole of the excise duty leviable thereon. A copy of the said Notification has been placed on the record and marked Ex. 1. Another Notification dated 18-3-1961 was issued by the Central Government in supersession of its earlier Notification dated 1-3-1961 (Ex. 1) by which it exempted cotton yarn of count not exceeding forty, if issued out of the factory in hanks from the whole of the excise duty leviable thereon. This Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yarns or filaments twisted together and used for sewing pieces of material together." (Page 496) "Warp - The lengthways threads of a cloth". (Page 515) "Pick - A thread of weft placed between the warp threads in one passage of the loom shuttle through the shed." (Page 397) "Count - The number of yarns is termed the "count". The cotton system is based on 840 yards to the hank, and the number of hanks that weigh 1 Ib. (7,000 grains) equals the count. (Page 149) 5.There is no dispute between the parties that the yarn under consideration is multiple fold yarn. It is used for manufacturing cloth and therefore it includes both yarn used length as well as the yarn placed between the lengthways yarn of the cloth. It is, however, contended that since it is of cotton and is constituted by a number of turns per inch in yarn it is 'Cotton Twist'. Here it may be relevant to point out that first instance there is a basic single yarn and when two single yarns are twisted they become a double-fold yarn. When more than two single yarns are twisted then they constitute a multiple-fold yarn. So far there is no dispute between the parties. However, the argument on behalf of the appellant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi upto 1957. No cross-examination has been directed to this witness so as to question his special knowledge and competence to depose on the subject. He has stated that a single yarn is produced from raw cotton fibres, twisted together, and made into strand. He has further stated that when a number of single yarns are folded together it becomes a multiple-fold yarn. Such multiple fold yarn is also called ply yarn but multiple fold yarn is nevertheless a yarn. As regards the term 'twist', he has stated that twist means a number of turns put in for the manufacture of a single yarn and that twisted and multiple fold yarn are not one and the same thing. He goes on to state that there is no such commodity as "twist" in textile nor he has come across any such commodity known as "twist" in textile literature. When asked as to what is "cotton twist" he has stated that when cotton is twisted it becomes a 'roving' (PUNIYA) (as it is colloquially called). He has also stated that roving cotton is not yarn, but it is a process preparatory to yarn. 7.We may point out here that in spite of our best efforts we were not able to lay our hands on the definition of the term 'cotton twist'. Of cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f by any stretch of imagination it can fall within the definition of the term "Cotton Twist" which is taxable. In other words if an item comes under the category of exempted articles then exemption must be granted even though by a certain stretch of imagination it may fall under dutiable articles also. In this view of the matter also the exemption upheld by the court below is correct. We may state here that it is conceded by the learned Counsel for the appellant that if it is held that the multiple fold yarn is a 'yarn' and not a "Cotton Twist" then the exemption upheld by the lower court cannot be called into question. 10.This brings us to the second contention of the learned Counsel namely that the suit is barred by limitation, under Section 40(2) of the Central Excises and Salt Act, 1944. The admitted position is that if the period of limitation for a suit like the present is held to be six months then it is admittedly barred by time and if it is held that Section 40 (2) has no application then the suit is admittedly within time. It is, therefore, not necessary to go into the details regarding the date of accrual of the cause of action and the date of the filation of the suit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duce the test of good faith in relation to act done. Good faith is one of the aspects in Section 40(1)". These observations were made in connection with the contention of the appellant before their Lordships that the words "anything done or ordered to be done" in this section would not mean anything done in violations of the provisions of the Act. It was also said that any thing done would not include a malicious act or an act done in bad faith. We are quite clear in our minds that their Lordships have not laid down anywhere expressly or even by implication that any levy or tax recovered under the Act would be an act done under the Act. All that their Lordships observed was that the test of good faith has not been introduced in sub-section (2) of Section 40 which is only one of the aspects in Section 40(1). In the case on hand there is no question of good faith involved and the only point is whether an illegal levy purporting to be under an Act is an act done under the Act. In our opinion it is not so. 12.In ILR (1964) 14 Raj. 847 it was observed that "the expression "anything done or purporting to be done under this Act" clearly includes not only acts which are done in compli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdiction, and consequently such a recovery of illegal impost which is outside the scope of the Act cannot be said to be anything done under the Act." No authority taking a contrary view has been placed before us by the learned Counsel for the appellant. We have, therefore no hesitation in coming to the conclusion that the suit has been rightly held to be within limitation by the court below as it does not fall under Section 40(2), Central Excises and Salt Act. 1944. No other point was argued on behalf of the appellant. 16.The respondent has filed cross-objection for award of interest pendente lite and future interest. It is urged that the lower court has assigned no reasons for not awarding interest from the date of the suit till the date of realisation of the amount. This is correct. Even though the lower court had discretion in the matter, it cannot be said to have exercised it judiciously when it has given no reasons in support of its finding. So far as interest after the date of the decree is concerned admittedly no stay of execution of the decree was ordered by this Court and it has not been shown to us that any obstruction was placed by the defendant in execution of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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