Clarificatory amendment on embroidery machine metre length applied retrospectively; duty to be computed by one roller only.

For embroidery machinery under the compounded levy scheme, metre length is to be measured by reference to only one roller: the distance between the first and last needle on a single roller or frame, not both rollers. A departmental circular and the amendment to Rule 96Z(1) were treated as clarificatory, so the revised definition applied retrospectively to support that method of computation. On that basis, duty computation had to follow the one-roller measurement and the assessee's interpretation was accepted.

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Issues: Whether, for computing the metre length of embroidery machinery under the compounded levy scheme, the distance between the first and last needle of one roller or of both rollers was to be taken into account.

Analysis: The circular of the Central Board of Excise and Customs clarified that two rollers or frames of an embroidery machine were not to be treated as two machines and that duty was to be computed on the basis of the length of one roller or frame. The relevant amendment to Rule 96Z(1) of the Central Excise Rules, 1944, with effect from 2 June 1998, defined metre length in relation to the machine as the distance between the points provided for the first needle and the last needle of only one roller. The Tribunal treated that amendment as clarificatory and retrospective, and followed the earlier view that the Board's circular and the amended rule supported the assessee's interpretation.

Conclusion: The metre length had to be computed with reference to only one roller, not both rollers, and the impugned order was set aside in favour of the assessee.

Ratio Decidendi: A clarificatory amendment defining the method of measurement for a levy scheme operates retrospectively, and a binding departmental circular consistent with that clarification governs computation of duty.

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