Exemption for glass fibre yarn bars countervailing duty, with refund of duty collected under protest and interest limited to 12%.

An exemption notification covering yarn spun wholly out of glass fibre was treated as extending to imported glass yarn, so countervailing duty could not be sustained and the duty collected under protest was refundable. The discussion also records that interest on the refund was allowed, but at 12% per annum rather than the 18% claimed. The operative principle is that where the exemption clearly applies to the goods, duty cannot be levied contrary to that exemption, and amounts collected under protest are liable to refund with interest at the rate granted.

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Issues: (i) Whether glass yarn wholly made out of glass fibre was exempt from countervailing duty under the exemption notification and whether the duty collected was refundable; (ii) whether interest was payable on the refunded amount at 18% per annum or 12% per annum.

Issue (i): Whether glass yarn wholly made out of glass fibre was exempt from countervailing duty under the exemption notification and whether the duty collected was refundable.

Analysis: The notification exempted yarn spun wholly out of glass fibre from the whole of excise duty leviable thereon. The authorities had previously informed the petitioners that no countervailing duty was payable on fibre glass filament yarns, and a departmental revision in an identical matter had already held that the same product was covered by the exemption. On that basis, the demand of countervailing duty on the imported glass yarn could not be sustained.

Conclusion: The issue was decided in favour of the petitioners, and the duty collected under protest was refundable.

Issue (ii): Whether interest was payable on the refunded amount at 18% per annum or 12% per annum.

Analysis: The petitioners sought interest at 18% per annum, but the Court granted relief at a lower rate while making the rule absolute.

Conclusion: The petitioners were held entitled to interest at 12% per annum instead of 18% per annum.

Final Conclusion: The petition succeeded, the impugned duty demand was not upheld, refund relief was granted, and the interest component was restricted to 12% per annum.

Ratio Decidendi: Where an exemption notification clearly covers the imported goods, countervailing duty cannot be levied contrary to that exemption, and amounts collected under protest are liable to refund.

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