Duty-paid polyester film used for metallised yarn can satisfy exemption conditions when lacquering is only a protective step.

Man-made metallic yarn made from duty-paid polyester film that is first metallised and then lacquered satisfies Notification No. 45/86-C.E., because the notification condition is met where the polyester film used in manufacture has already borne the appropriate excise or additional duty. Lacquering was treated as only a subsequent protective step to prevent oxidation and preserve the aluminium deposit, not as a process defeating the exemption. On that basis, the exemption for man-made metallic yarn falling within the specified tariff entry was available.

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Issues: Whether man-made metallic yarn manufactured from duty-paid polyester film which is first metallised and then lacquerred satisfies the condition in Notification No. 45/86-C.E. for exemption from duty.

Analysis: The exemption covered man-made metallic yarn falling under the specified tariff entry, subject to use in manufacture of polyester film or metallised polyester film on which appropriate duty of excise or additional duty had been paid. The process showed that the plain polyester film was first metallised and that lacquering was only a subsequent protective process to prevent oxidation and preserve the aluminium deposit. Since the polyester film used for manufacture of the metallic yarn had already suffered duty, the condition in the notification was treated as fulfilled.

Conclusion: The exemption under Notification No. 45/86-C.E. was held available to the respondents.

Ratio Decidendi: Where duty-paid polyester film is first metallised and lacquering is only a subsequent protective step, the resulting metallic yarn satisfies the notification condition requiring use of duty-paid polyester film or metallised polyester film.

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