1978 (4) TMI 99 - HC - Central Excise

Summary

Issues: Interpretation of exemption notifications under Central Excise Rules pre and post Finance Act of 1972

Analysis:
1. The petitioner, a manufacturer of cotton terene blend and synthetic fibre yarn, sought exemption for waste staple fibre yarn similar to waste cotton yarn under Central Excise Rules. The Government issued Notification No. 59/1965 exempting waste staple fibre yarn known as hard waste from duty under Tariff Item No. 18.

2. The Finance Act of 1972 introduced Tariff Item No. 18E, affecting the classification of terene/cotton yarn. Subsequently, Notification No. 172/1972 exempted waste staple fibre yarn from duty. The petitioner cleared consignments of hard waste during the interregnum between the Act and the notification.

3. An audit objection led to a demand for duty payment on the hard waste cleared by the petitioner. The Appellate Collector held the petitioner liable for duty post the Act's implementation, with revised rates for different blends.

4. The petitioner's revision to the Government was rejected, citing the exemption under Notification No. 59/1965 did not extend to hard waste under Tariff Item No. 18E post the Finance Act.

5. The petitioner argued under Section 24 of the General Clauses Act that the 1965 exemption should continue until superseded by a fresh notification. The revenue contended the 1965 exemption was specific to Item 18 and not applicable to Item 18E.

6. Relying on precedents like K.S.V.N. and Sons v. State of Madras, the court held that the 1965 exemption remained valid until a new notification was issued post the Finance Act of 1972. The court quashed the demand for duty, upholding the petitioner's contention based on the General Clauses Act.