Single-stage levy principle extends KVIC fibre exemption to tow; later amendment treated as clarificatory and retrospective.

Tow used to manufacture polyester fibre cleared under Notification No. 191/85 was not chargeable to duty because the tariff scheme contemplated a single-stage levy on either tow or staple fibre, not dual taxation. The exemption for polyester fibre supplied to KVIC had to be construed in light of Notification No. 84/87, which showed reciprocal treatment of tow and fibre depending on where duty had already been paid. Notification No. 76/92, inserting an express exemption for tow used in such fibre, was treated as clarificatory of the original scheme and retrospective in effect.

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Issues: Whether tow used in the manufacture of polyester fibre supplied to KVIC under Notification No. 191/85 dated 28-8-1985 was chargeable to duty, and whether the later exemption granted by Notification No. 76/92 dated 1-7-1992 was clarificatory and retrospective.

Analysis: The exemption for polyester fibre supplied to KVIC had to be read in the setting of the levy structure for polyester staple fibre and tow, where the duty was intended to operate only at one stage, either on tow or on staple fibre. Notification No. 84/87 contemplated reciprocal exemption between tow and fibre depending on whether duty had been paid at the corresponding stage, showing that the scheme was not one of dual levy. Reading Notification No. 191/85 as leaving tow taxable would defeat its object of extending relief to the KVIC supply programme. The later amendment by Notification No. 76/92, inserting the relevant exemption for tow used for fibre supplied to KVIC, was therefore treated as explanatory of the original scheme.

Conclusion: No duty was chargeable on tow used to manufacture polyester fibre cleared under Notification No. 191/85, and the subsequent amendment was clarificatory with retrospective effect.

Ratio Decidendi: Where the tariff scheme contemplates a single-stage levy, an exemption for the end-product must be construed to cover the corresponding input stage so as to give effect to the purpose of the notification.

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