Retrospective exemption for TOW under the polyester fibre and yarn scheme rendered the duty demand unsustainable.

Duty on TOW arising during manufacture of polyester staple fibre and polyester staple yarn was treated as unsustainable because the exemption scheme for the relevant period was later amended retrospectively to extend coverage to TOW. The Tribunal considered that amendment as reflecting the intended scope of the exemption for the period in dispute, so the demand could not be upheld. On that basis, the impugned order was liable to be set aside.

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Issues: Whether the demand of duty on TOW arising during manufacture of polyester staple fibre and polyester staple yarn was unsustainable in view of the retrospective exemption introduced for the relevant period.

Analysis: The exemption notification governing the final products was relied upon by the assessee, while the dispute centred on whether TOW, being an intermediate product, was also covered. The record showed that the legislative scheme was subsequently amended retrospectively to extend exemption to TOW for the period in question, and the Tribunal treated that amendment as reflecting the intended coverage of the product for the relevant period.

Conclusion: The duty demand on TOW was not sustainable and the impugned order was liable to be set aside.

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