Excise duty proviso on power looms applies only on transfer from a legally distinct person, not mere division between partners.

Higher excise duty under the power-loom notification applied only where manufacture began after acquiring looms from another legally distinct person. A partnership firm is not a separate person in law for this purpose, and division of jointly owned looms between the same individual partners after dissolution did not amount to acquisition from another person. On that reading, the proviso enhancing duty could not be invoked against the petitioners, and the demand for the higher levy was invalid. The legal effect is that transfer language in excise notifications must be strictly satisfied before an enhanced rate can be imposed.

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Issues: Whether the higher rate of excise duty under the proviso to the notification applied where the petitioners, after dissolution of their partnership, divided and continued to operate the same power looms in their individual capacities.

Analysis: The special procedure for levy on power-loom cotton fabrics was introduced by the Central Excise Rules and the notification prescribing graded rates, with a proviso increasing the rate where manufacture was commenced for the first time after the relevant date by acquiring power looms from another person who was or had been a licensee. The decisive question was whether the petitioners had acquired the looms from another person. The earlier licence stood in the names of the two brothers as individuals, though described as partners, and the looms had been jointly owned and used by them. A firm is not a person in law, and a division of jointly owned looms between the same two individuals after dissolution could not be treated as an acquisition from another person within the language of the proviso.

Conclusion: The proviso did not apply to the petitioners' case, and the demand of higher excise duty was invalid.

Final Conclusion: The impugned orders suffered from an error of law and were quashed, leaving the petitioners not liable to the enhanced levy.

Ratio Decidendi: A proviso enhancing excise duty for manufacture commenced by acquiring power looms from another person applies only where there is a transfer from a legally distinct person; a partnership firm, where not the licence-holder in law, cannot satisfy that requirement merely because its assets are divided between the same individual partners.

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