Metre length for two-roller embroidery machines is computed on one roller only; contrary duty demands and penalties fall away.

For embroidery machines assessed under the special procedure, metre length is to be computed with reference to one roller only, even where the machine has two rollers. The stated rationale is that a two-roller embroidery machine remains a single machine for duty purposes, and the later amendment was treated as clarificatory and consistent with the earlier trade notice and departmental understanding. On that basis, a duty demand calculated by adding both rollers was unsustainable, and the related penalties, confiscation, redemption fine, and interest also failed as they were consequential to the incorrect computation.

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Issues: (i) Whether, for embroidery machines having two rollers, the "metre length" under the special procedure was to be computed by taking only one roller or by adding both rollers; (ii) whether the demand of duty, penalties, confiscation, and allied consequences founded on the contrary computation could stand.

Issue (i): Whether, for embroidery machines having two rollers, the "metre length" under the special procedure was to be computed by taking only one roller or by adding both rollers.

Analysis: The special procedure under the relevant rules fixed duty on a machine-specific basis with reference to the metre length of the embroidery machine and the rate prescribed for that machine type. The definition of metre length, together with the departmental trade notice and the later amendment, indicated that an embroidery machine with two rollers was still one machine, and the computation of metre length was to proceed on the basis of one roller only. The machine with two rollers was not to be treated as two machines for duty computation merely because it had two working rollers. The later amendment was treated as clarificatory and consistent with the earlier departmental understanding reflected in the trade notice.

Conclusion: The metre length of the embroidery machine was to be taken with reference to one roller only, and the Revenue's computation on the basis of both rollers was and unsustainable.

Issue (ii): Whether the demand of duty, penalties, confiscation, and allied consequences founded on the contrary computation could stand.

Analysis: Since the foundation of the demand was the incorrect computation of metre length, the duty demand and the consequential penalties, confiscation, redemption fine, and interest could not be sustained. The impugned order proceeded on a mistaken legal premise as to the applicable metre length for the machine type in question, and therefore the entire consequential levy failed.

Conclusion: The duty demand and all consequential penalties, confiscation, and related directions were liable to be set aside.

Final Conclusion: The appeals succeeded and the impugned orders were set aside in entirety, resulting in relief to the assessees and the connected appellants.

Ratio Decidendi: For embroidery machines under the special procedure, "metre length" is determined with reference to one roller only, and a machine having two rollers cannot be assessed as though its metre length were doubled merely because it contains two rollers.

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