1991 (3) TMI 276

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....uty in respect of 3, 16,689 Kgs. of cotton yarn manufactured by them which did not go into weaving of fabrics during the period from 1-12-1977 to 31-12-1979. The duty was worked out by the department on the basis ot count of the yarn 115s, the highest count of yarn manufactured by the company during the aforesaid period. The company, however, contended that the said quantity of yarn being cotton waste yarn was fully exempted under Notification No. 95/61-C.E., dated 1-4-1961. They also stated that till about 5th December, 1979 the department had been extending to the said cotton waste yarn the benefit of the said notification. However, on or about 5th December, 1979 the Supdt. addressed a communication to the appellants herein asking them to....

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.... confirmed by the Assistant Collector was calculated on the basis of the highest count of yarn manufactured by the appellants during the said period in the absence of maintenance of data regarding the quantity of waste yarn countwise cleared by the appellants. 1.4 On appeal, the Collector of Central Excise (Appeals), Bombay, upheld the aforesaid finding regarding duty liability of waste cotton yarn arising after the stage of taking the yarn for weaving. In other words, the waste arising upto the stage the yarn was taken for weaving was held to be eligible for exemption in terms of Notification No. 95/61. The lower appellate authority, however, held that the demand was barred by limitation and he restricted the demand only upto the period o....

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....period covered by the show cause notice but it would mean that the payment of excise duty demanded by the department would work out to as high as Rs. 7.93 per kg. This could never be the intention of the Government to levy such a high rate of duty at such low priced goods and this itself shows the total absurdity of the stand taken by the department. They have also submitted that Rule 49A of the Central Excise Rules postponed the levy of duty on yarn from the spindle stage to the stage of clearance of fabric. It is in view of this postponement of duty that the waste cotton yarn arising during the process of weaving should also be given the benefit of the exemption in terms of the said Notification No. 95/61. 2.1 Learned advocate while urgi....

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....e. In the case of the New Great Eastern Spg. & Wvg. Co. Ltd., mentioned supra, the Tribunal has observed as follows :- "The decision of the Tribunal in the case of Raj Kumar Mills Ltd. would squarely apply to these cases ........ Having regard to the scheme of collection of duty of excise on goods manufactured in a factory and removed for manufacture of another commodity in the same factory and in particular the provisions of Rule 49A, we have no reason to differ from the decision of the Tribunal dated 14-4-1986 in the said case of M/s. Raj Kumar Mills." 3.1 The Tribunal's decision and the observations made therein, extracted above and relied upon by the learned advocate for the appellants do not help them. In that case the Tribunal was ....