Additional customs duty on imported fabric applies only once to the actual material used, not again to fibre and yarn separately.

Additional customs duty under the Additional Duties of Customs Rules, 1976 attaches to the material actually used in manufacture of the imported article. On imported fabric containing synthetic fibre or yarn, the levy applies only to the yarn content where the fabric is made from yarn, because fibre and yarn are distinct commercial products and the duty cannot be duplicated by charging again on the fibre from which the yarn was produced. The relevant notification and schedule were read as limiting additional duty to the actual material used in the fabric, so a demand beyond the duty already levied was not sustainable.

---

---

Issues: Whether additional customs duty was leviable on the yarn content of imported fabric after duty had already been charged on the fibre content.

Analysis: Paragraph 2 of the Additional Duties of Customs Rules, 1976 fastens the levy to the material used in the manufacture of the imported article. The relevant notification and its schedule indicate that fabrics containing more than 10 per cent by weight of synthetic fibre or yarn are chargeable with additional duty only to the extent of the material actually used. Fibre and yarn are distinct commercial products, and where the fabric is made from yarn, the levy cannot be duplicated by charging duty again on the fibre from which the yarn was manufactured.

Conclusion: The additional duty was chargeable only on the yarn actually used in the imported fabric and not again on the fibre content; the demand over and above the duty already levied was not sustainable, in favour of the assessee.

---