TaxTMI 
TaxTMI 
2001 (1) TMI 975
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....1989 Rs. 2,13,765.55 31 22-11-1989 Rs. 49,330.51 2. In the affidavit filed in support of the writ petition, the petitioner mills would submit that the petitioner has got several spinning and weaving mills in the States of Tamil Nadu, Kerala and West Bengal and in Tamil Nadu, the Mills are at Madurai, Tuticorin and Ambasamudram; that one of the main merchandise manufactured and marketed by the petitioner company is "Coats Threads", which has universal recognition for its quality and durability; that specification of the threads varies from country to country and the threads manufactured for the Indian market is to the specification No. 60/1 whereas in some other countries the thread specification varies from No. 60/1, 60/2 and 60/3; that the threads exported to a particular country must satisfy the specification of such countries; that the threads and yarns are one and the same; that by multi-folding and more twisting, yarns are made into threads; that all over the world, the yarns and threads are treated as one and the same; that in the Central Excise Tariff Act also, the yarn is defined to include threads and no separa....
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.... containing synthetic staple fibres Nil Chapter No. 54 54.04 Artificial filament yarn and sewing thread, including artificial monofilament of less than 60 deniers not textured Nil Chapter No. 55 55.05 Yarn (including sewing thread of synthetic staple fibres) Nil that the above descriptions unambiguously, show that the yarn includes sewing threads because yarns are spun into threads that the subordinate officials misconstruing the provisions of the Act, ordered that the threads would sustain another incidence of excise duty though the threads are spun out of the duty paid yarn; that challenging the legality of the said decision, the petitioner filed writ petition and the same was being admitted and the authorities were restrained from imposing second incidence of duty on the threads; that the Government of India by various notifications, clarified that as per the Act, yarn includes sewing threads, doubled or multi-folded and the threads are manufactured out of the yarn falling under the Chapters 52, 54 and 55, on which the duty of excise has already been paid, the department authorities cannot lev....
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....pecified in the Schedule of 'Central Excise Tariff', other than the goods 'A' listed against Sl. Nos. 2 to 8. As a whole, the destination of any country or territory outside India; that threads are not mentioned as the excluded item and therefore, excise duty paid on the exported goods are liable to be refunded and the contention in the show cause notice that Notification 197/62 does not allow any rebate as they are not sustainable in law; that on 28-9-1999, the first respondent also afforded personal hearing and passed orders on the very same day stating that proviso (1) of the Notification 197/62, dated 17-11-1962 stipulated on the excisable goods should be exported directly from the factory unless and otherwise provided in the Table to the said notifications or permitted by the Board and in the present case, the duty has been paid on the SS Polyesters yarn cleared under GP from one factory to another and the same has been converted to SS Polyester thread and exported and as per Rule 12 of the notification, the duty on the goods exported alone are liable for rebate and not the contents of the goods exported and on such reasoning, rejected the claim of rebate filed by the petition....
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.... dated 17-11-1962 as amendment issued under Rule 12 of the Central Excise Rules, 1944, for claiming rebate stipulates that "the goods are to be exported after payment of duty in cash direct from a factory or a warehouse"; that inasmuch as the above condition was not specified for the export of thread by the petitioner, the Maritime Collector has rejected the rebate claimed, by his order dated 28-12-1989 for item Nos. 1 to 4 falling under AR4s Nos. 44, 52, 58 and 72 rejecting AR 4 Ne31 also; that it is true that yarn includes thread and duty is not liable on thread which is manufactured out of the duty paid yarn but the rejection of the rebate claim was only for the non-fulfilment of condition laid down in Notification No. 197/62, dated 17-11-1962 as amended, which is fully in accordance with law, wherein, the stipulation is that "the goods are to be exported after payment of duty in cash directly from a factory or a warehouse"; that inasmuch as the goods, namely threads, when cleared, have been exported from the petitioner's factory, the same is not entitled for payment of rebate under Rule 12 of the Central Excise Rules, 1944 as no duty was paid on the thread; that payment of exci....
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.... since the excise duty paid on such exported threads the petitioner is entitled to get the refund, they filed the claim application claiming an amount of Rs. 6,91,585.59 ps. from the first respondent Maritime Collector and since he rejected the application, filing an appeal before the Commissioner, Excise, for refund of excise duty, which also came to be rejected for refund on ground that the refund of excise duty is not for the export of sewing thread, but if it had been paid only in cotton yarn; that it is Central Excise Tariff Act, 1985 which is relevant; that under Chapter XI, all types of yarn and fabric and other products are classified; that under Section 11 of the Central Excise Tariff Act, 1985, various textiles and textile articles are classified; that Note 3 of Section XI lays down the Heading Nos. 52.03, 52.04, 54.04, 55.05 and 55.06, the 'sewing thread' means multiple folded or cabled yarn; that yarn includes sewing thread. In ascertainment of this, the learned counsel would cite a Division Bench judgment of this Court delivered in State of Tamil Nadu v. R.V. Krishniah Chetty and Sons reported in 1992 (Vol. 92) STC 262 wherein relying on two judgments delivered in Muth....
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....d in 1996 (88) E.L.T. 644 (S.C.) is only an obiter dicta and the proposition made is that all the threads are made of yarn and therefore all the yarns are threads and amounts saying all men are mortal and therefore all mortals are men; that there could also be other things and hence the argument of the learned counsel for the petitioner that yarn is thread and yarn and thread are one and the same and therefore the duty paid on yarn manufactured at one mill even after getting converted into thread in the other mill would become entitled to get the rebate, is unacceptable. The learned counsel would also cite a judgment of the Tribunal delivered in Vardhman Spg. & Gen. Mills Ltd. v. Collector of C. Ex., Chandigarh reported in 1999 (105) E.L.T. 121 (Tribunal) wherein it has been held: "We have carefully considered the pleas advanced from both sides. In our view, while there is substantial force in the legal plea of the Revenue that duty is to be charged on any excisable goods in the form and on the value (if it is ad valorem) prevalent at the time of removal of those goods from the factory of manufacture of those goods but so far as yarn is concerned, direct judgment of the Ap....
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....would submit that yarn and thread are one and the same for which duty shall be paid at the yarn stage; that the operative portion of the order passed by the authorities concerned rejecting the claim of the petitioner is to the basic reasoning that the duty paid on thread stage 16/2; that the duty has not been paid at the thread stage 16/2 but only at the yarn stage 16/1 and hence the petitioner is not eligible to get the rebate and would pray to dismiss the writ petition. 16. In clarification, the learned senior counsel for the petitioner would further submit that two Division Benches of this Court held that thread is yarn respectively reported in (1) Madura Mills Company Limited v. Government of Madras (1970) 25 STC 407 and (2) 1992 (Vol. 92) STC 262 (supra) and also by a single Judge of this Court in W.P. No. 15469 of 1990, dated 24-9-1999. 17. In clarification, the learned counsel for the respondents would submit that the Supreme Court has not gone into the question of classification and would rely on the judgment of the Apex Court reported in 1988 (37) E.L.T. 471 (S.C.) supra. 18. In consideration of the pleadings by parties and having regard to the mate....
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....t of duty paid yarn. But the reason assigned on the part of the respondents for rejection of the rebate claimed by the petitioner is that only for the non-fulfilment of the condition laid down in Notification No. 197/62, dated 17-11-1962, which stipulates 'the goods are to be exported after payment of duty in cash directly from a factory or a warehouse' and that inasmuch as the goods viz., threads, have been exported from the petitioner's factory, the same is not entitled for payment of rebate under Rule 12 of the Central Excise Rules, 1944. 21. There is no controversy regarding the manufacture of the items of goods enumerated at the end of Para 1 of this order forming part of the prayer column of the writ petition have been exported by the petitioner on different dates to Indonesia in the name of 'Coats Threads'. There is also no controversy so far as the said items having suffered excise duty, when they were in the form of cotton yarn. There is also no controversy that the threads are made of cotton yarns by multi-folding and more twisting and for the purpose of Central Excise Tariff Act also, the yarn is defined to include threads and no separate excise levy could be col....
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....e sister concern of the petitioner's is not relevant for consideration for payment of rebate under Rule 19 of the Central Excise Rules, 1944 since no duty was paid on them in the form of threads when they got exported? So far as the payment of excise duty is concerned, the yarn is thread and once the excise duty is paid on yarn, no separate excise duty need be paid on the threads and therefore the claim of the petitioner that yarn is thread and they are one and the same and if duty is paid in any one of these forms, the other form does not attract payment of excise duty. This position has been made clear not only by the two Division Bench decisions cited on the part of the petitioner but also by the Apex Court judgments cited on the part of the petitioner and this position is also acceptable on the part of the respondents. But, their arguments are that since the excise duty is paid in the form of yarn by the sister concern of the petitioner and the goods are to be exported after payment of duty direct from the factory or a warehouse, the respondents claim that as per the notification, those goods that is the yarn which suffered the tax in the sister concern are not exported from th....
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....e factory or a warehouse', it is clarified that it is the same goods (yarn) which after the payment of duty that is exported from the factory in the form of threads. It is also not the case of the respondents that because the yarn of the sister concern by the petitioner mills having been exported in the form of threads, the Government have suffered any loss or that the petitioners have circumvented or violated any law and therefore the denial of the rebate by the respondents is not only unreasonable and arbitrary but erroneous as well. No valid or acceptable reason has been offered on the part of the respondents to reject the claim of the petitioners excepting to misinterpret the meaning of the rule. Interpretations must only render clarity and cannot deny the due of the petitioner. 26. Whether the yarn is from the petitioner mills or from its sister concern is immaterial. Relevancy lies whether that yarn, whether in the form of yarn or thread or in any other form, within the permissible limits of law, has suffered the excise duty or not? Once it comes to be known that it has suffered the excise duty, automatically, the owner of the same is entitled to get the rebate as cla....