Texturised yarn duty: notification did not shift the burden to prove prior duty payment on base yarn.

Under T.I. 18(ii) of the Central Excise Tariff read with Notification No. 125/75-C.E., the Tribunal held that the processor was not required, as a matter of initial burden, to prove that base yarn had already suffered duty; the notification only reduced the additional duty component and did not alter the basic duty framework. The assessee also supported its claim with gate passes and supplier letters showing procurement from the open market or identifiable sources, while the Department failed to verify or establish non-payment of duty. The demand for differential duty was therefore not sustainable and was set aside.

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Issues: Whether, under T.I. 18(ii) of the Central Excise Tariff read with Notification No. 125/75-C.E. dated 12-5-1975, the processor was required to prove that the base yarn had already suffered duty, and whether the demand for differential duty was sustainable.

Analysis: The tariff structure and the notification were read together to determine the duty payable on texturised yarn. The notification only reduced the additional component of duty and did not alter the basic framework. The Tribunal held that the wording of the entry and notification did not cast the initial burden on the processor to prove payment of duty on the base yarn. Even otherwise, the assessee had produced gate passes and corroborative letters showing that the base yarn had been purchased from the open market or from identifiable suppliers, and the Department had not undertaken any meaningful verification or shown that duty had not in fact been paid. The argument based on the expression "duty for the time being leviable" was rejected as inapposite to the wording of the notification and tariff entry in the present case.

Conclusion: The demand for differential duty was not justified and was set aside in favour of the assessee.

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