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of <h1>Supreme Court rules 'hank' term for excise duty exemption invalid, quashes demand.</h1> <h3>THE CANNANORE SPINNING AND WEAVING MILLS LTD. Versus CC. & CE. COCHIN</h3> THE CANNANORE SPINNING AND WEAVING MILLS LTD. Versus CC. & CE. COCHIN - 1970 AIR 1950, 1970 (2) SCR 830, 1969 (3) SCC 112, 1978 (2) E.L.T. J 375 (SC) Issues:Interpretation of the term 'hank' for excise duty exemption on cotton yarn coils.Detailed Analysis:The case involved a company manufacturing cotton yarn of various counts and claiming exemption from excise duty on yarn cleared out of the factory in coils. The dispute centered around the interpretation of the term 'hank' in the notifications granting the exemption. Initially, the government granted exemption for certain counts of cotton yarn cleared in 'hanks'. However, a subsequent notification defined 'hank' as a coil of yarn not exceeding a specific length, deviating from the commercial understanding of the term.The appellant's factory was inspected, and the department claimed that the yarn produced did not meet the specified 'hank' criteria for exemption. The appellant challenged the demand through departmental proceedings, followed by a High Court petition under Article 226 of the Constitution. Both the single judge and the appellate bench of the High Court upheld the department's interpretation of 'hank' as a coil of specific length, denying the appellant's exemption claim.Upon appeal to the Supreme Court, the judges analyzed the notifications and the subsequent amendments. They noted that the term 'hank' had acquired a technical meaning in commercial circles, but the authorities did not use it in that sense in the notifications. The judges highlighted that the retrospective effect given to the explanation of 'hank' in a later notification indicated that the term was not intended to have a technical meaning in the original notifications.The court emphasized that the rule-making authority did not have the power to define 'hank' with retrospective effect, rendering the subsequent clarification invalid. Therefore, the Supreme Court allowed the appeal, quashing the demand for excise duty and ordering the respondents to bear the costs incurred by the appellant in both the Supreme Court and the High Court.In conclusion, the judgment clarified the interpretation of 'hank' for excise duty exemption on cotton yarn coils, emphasizing that the term was not intended to have a technical meaning in the original notifications, leading to the allowance of the appeal and the rejection of the department's demand.
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