Classification of unusable polyester yarn as waste product shifted the onus and supported taxation under the lower entry.

Unusable polyester yarn sold as waste product was held to fall within Entry 32 of the relevant notification rather than Entry 55. The Revenue bore the initial burden under Section 21, but once the assessee admitted that the goods were not sold as yarn and were instead sold as waste, the onus shifted to the assessee to establish entitlement to the lower-rate entry. On that factual basis, the classification under Entry 32 was accepted and the assessee's claim under Entry 55 was rejected.

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Issues: Whether the sale of unusable polyester yarn was taxable as a waste product under Entry 32 of Notification No. ST-II-5785/X-10(1)-80-U.P. Act XV/48-Order-81 dated 7.9.1981, as amended, or under Entry 55 of the same notification.

Analysis: The dispute turned on the effect of the assessee's own case that the goods were unusable and were sold as waste product. The distinction between the burden of proof and the shifting onus was noted: while the initial burden in proceedings under Section 21 lay on the Revenue, once the assessee admitted the goods were not being sold as yarn but as waste product, the onus shifted to the assessee to show that a lower-rate entry applied. In that factual setting, the goods were found to fall within Entry 32 rather than Entry 55.

Conclusion: The question was answered against the assessee and in favour of the Revenue.

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