Central excise rate for captive-use yarn turns on removal date, not later collection under Rule 49A.

Rule 49A postpones collection of central excise duty with interest for captive-use cotton yarn, but it does not alter the point at which the levy is attracted. The applicable rate is determined by the date the yarn is removed for manufacture of fabrics, not the later date on which duty is collected at clearance of the fabrics. On that basis, the reduced rate that came into force from 1 March 1988 did not apply to yarn removed before that date. The demand was upheld and the challenge failed.

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Issues: Whether the reduced rate of central excise duty applicable from 1-3-1988 could be applied to cotton yarn removed for captive use before that date but on which duty was collected later under Rule 49A.

Analysis: Rule 49A only postpones collection of duty with interest and does not shift the point at which the levy becomes payable. The relevant date for determining the applicable rate of duty is the date on which the yarn is removed for manufacture of fabrics, not the later date when duty is collected on clearance of the fabrics.

Conclusion: The reduced rate of duty was not applicable. The demand was upheld and the appeal failed.

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