Higher duty on powerlooms denied where dismantling was not treated as a reduction in authorised capacity.

Higher duty under Notification No. 41/65 applied only where the number of authorised powerlooms was reduced pending amended permission from the Textile Commissioner. Dismantling eight of twelve authorised looms, without sale or gift and in light of the Textile Commissioner's clarification that a fresh amended permit was not required, did not amount to the kind of reduction contemplated by the notification. The Government found that the lower authorities had misapplied the term "reduction" and accepted the assessee's position as reasonable. Duty at the higher rate was therefore not payable on the remaining four looms, and consequential relief followed.

---

---

Issues: Whether the assessee was liable to pay duty at the higher rate under Notification No. 41/65 when 8 out of 12 authorised powerlooms were dismantled and the Textile Commissioner had clarified that a fresh amended permit was not required for dismantling.

Analysis: The notification contemplated higher duty only in the event of a reduction in the number of powerlooms authorised, pending amended permission from the Textile Commissioner. The dispute turned on whether dismantling of looms, without transfer by sale or gift and in the light of the Textile Commissioner's clarification, amounted to such a reduction as to attract the higher rate. On the facts, the Government accepted that the assessee's position was reasonable and that the lower authorities had misapplied the expression 'reduction'.

Conclusion: The assessee was not liable to pay duty at the higher rate on the remaining 4 looms, and the revision application was allowed with consequential relief.

---