1984 (4) TMI 283

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....culiar wordings of Item 18 of the Central Excise Tariff and the exemption Notification No. 125/75-C.E., dated 12-5-1975. In order to facilitate the understanding of the issues involved in this appeal, we reproduce below the Tariff entry as well as the exemption notification as in force at the material time :- "18 Rayon and Synthetic Fibres and yarn Tariff-     Item     No. Description of goods Rate of duty Basic     18. Rayon and Synthetic fibres and yarn including Textured yarn, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power.     (i) Fibres and Yarn, other than Textured Ya....

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....fter dyeing on payment of job charges. During the dyeing operation, because of passage of steam, the hand-knitted yarn acquired a degree of fluffiness or bulk which, according to the Department, amounted to texturising. The appellants cleared the dyed yarn on payment of texturising duty of Rs. 10.00 per kg. and this duty is not the subject matter of this appeal. Subsequently, the Department raised the aforesaid demand of Rs. 3,42,084 for recovery of the base grey stage duty from them on the ground that the appellants had failed to prove that such duty had also been paid on the yarn which was dyed and texturised. It is this demand which they were now contesting. Their arguments before us were twofold : (1) Central Excise duty was a tax on....

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....en paid and even were the Department was able to discharge that onus, the demand for base stage duty should have to be made against the spinning mill which manufactured the base yarn and not the appellants. The appellants added that besides the purchase challans, they had submitted some gate passes also to the Central Excise authorities and it was for the Department to undertake the further verification, if they so desired, by contacting the dealers and the original manufacturers. The appellants could have furnished more documents also, but in the meantime they heard of the favourable Govt. of India Order-in-Revision (Order No. 887 of 1981, dated 5-12-1981) passed in a similar case of M/s. New Pritam Finishing Industries, Ludhiana, and t....

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.... was on the spinner of that yarn. There were cases where the spinning mills manufacturing the base yarn were further texturising the yarn also. In that case, further duty under Tariff Item 18(ii) would have been payable on texturised yarn. However, in order to obviate the need of having to pay the duty twice, the Tariff entry as well as the exemption notification made the provision that the spinner could pay the base duty as well as the texturising duty together at the time of removal of texturised yarn. That is the only reasonable interpretation of the Tariff entry and the exemption notification as they were worded at the material time. The condition of the exemption referred to by the Department's Representative was not a new condition; i....