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Issues: (i) Whether the proceedings after remand were without jurisdiction because the show cause notices dated 7-3-1983 had ceased to survive and the matter had to be placed before the Collector under the amended adjudication scheme; (ii) whether duty could be demanded on the base yarn used in crimped yarn production when the appellants claimed open-market purchase and duty-paid character of the base yarn.
Issue (i): Whether the proceedings after remand were without jurisdiction because the show cause notices dated 7-3-1983 had ceased to survive and the matter had to be placed before the Collector under the amended adjudication scheme.
Analysis: The original notices were issued and initially adjudicated before the amendment to Section 11A of the Central Excises and Salt Act, 1944. After remand, the amended statutory scheme under Section 8 of the Central Excises and Salt (Amendment) Act, 1985 required pending proceedings to be dealt with by the Collector. The prior appellate order was treated as a remand directing compliance with the amended procedure, not as a declaration that the notices themselves were void. The subsequent adjudication therefore conformed to the statutory transfer of jurisdiction, and the objection based on lack of authority could not succeed.
Conclusion: The jurisdictional challenge failed and the proceedings were held valid.
Issue (ii): Whether duty could be demanded on the base yarn used in crimped yarn production when the appellants claimed open-market purchase and duty-paid character of the base yarn.
Analysis: The notification governing textured yarn contemplated duty only to the extent in excess of the duty-paid base yarn. On the facts, there was no proof that the base yarn had not suffered duty. Where open-market purchase was asserted and no contrary evidence established non-duty-paid procurement, duty could not be demanded on the base yarn merely because the department lacked readily available documentary support from the assessee. The liability to duty was therefore confined to the differential amount over the duty on base yarn.
Conclusion: The demand on base yarn was rejected, and duty was restricted to the amount payable in excess of duty on base yarn.
Final Conclusion: The appeals succeeded in part, with the adjudication upheld on liability but the duty demand directed to be recalculated by treating the base yarn as duty paid.
Ratio Decidendi: After remand, pending central excise proceedings must be taken forward in accordance with the amended statutory allocation of adjudicatory authority, and where a notification limits liability to duty in excess of duty-paid base material, the department must establish non-duty-paid character before demanding duty on that base material.
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