Retrospective duty on pre-duty yarn stock was rejected where exemption withdrawal could not revive past liability.

Duty could not be demanded on pre-duty yarn stock by using the proviso to Notification No. 226/77-C.E. to give retrospective effect after the exemption under Notification No. 132/77-C.E. had been withdrawn. The issue was treated as covered by earlier High Court decisions rejecting retrospective operation of the yarn duty component, and in the absence of any contrary High Court view, that reasoning was followed. The departmental demand on the pre-duty stock was therefore not sustained, and the challenge to the demand succeeded.

---

---

Issues: Whether duty could be demanded on the pre-duty stock of yarn by applying the proviso to Notification No. 226/77-C.E. dated 15-7-1977, so as to give retrospective effect to yarn duty after the exemption under Notification No. 132/77-C.E. dated 18-6-1977 had been withdrawn.

Analysis: The appeal turned on the effect of the two exemption notifications and the reach of the proviso in the later notification. The point was held to be squarely covered by earlier High Court decisions which had accepted the assessees' challenge to the retrospective operation sought to be attached to the yarn component of duty. In the absence of any contrary High Court view, the same reasoning was adopted and the departmental demand on the pre-duty stock was not sustained.

Conclusion: The challenge to the demand succeeded and the appeal was allowed with consequential relief.

---