1987 (12) TMI 117 - AT - Central Excise

Summary

Issues:
1. Interpretation of Central Excise Notification No. 55/78 regarding duty on texturised yarn produced from imported base yarn.
2. Liability of the respondents for payment of additional duty of customs on imported goods.
3. Applicability of Central Excise Notification No. 55/78 to imported goods.
4. Whether the imported base yarn being exempt from duty affects the duty on texturised yarn.

Analysis:

1. The case involved a dispute over the interpretation of Central Excise Notification No. 55/78 concerning the duty on texturised yarn produced from imported base yarn. The respondents argued that they were entitled to pay duty on the texturised yarn at a specific rate, while the Central Government contended that the duty for the time being leviable on the base yarn should be paid. The Appellate Collector initially allowed the appeal, but the Central Government disagreed, leading to the present case.

2. The issue of the liability of the respondents for payment of additional duty of customs on imported goods was raised. The Central Government issued a show cause notice to recover the additional duty of customs leviable on the base yarn from the respondents. However, it was established that the imported base yarn was cleared by the customs authorities free of basic customs duty and additional customs duty, making the importer, not the respondents, liable for any recoverable duty.

3. The applicability of Central Excise Notification No. 55/78 to imported goods was contested. The Collector argued that since the levy had not been discharged on the base yarn, the concessional rate of duty under the notification would not apply. However, the respondents maintained that the notification did not specify conditions related to additional duty of customs on the imported base yarn.

4. The impact of the imported base yarn being exempt from duty on the duty of the texturised yarn was examined. It was concluded that even if the purpose of the notice was to recover excise duty equivalent to the additional duty of customs on the imported base yarn, it could not be demanded from the respondents as they were not the importers. The imported yarn was not excisable, and hence, no excise duty could be imposed on it.

In conclusion, the show cause notice dated 18th May, 1982 was discharged, and the appeal was dismissed based on the finding that the respondents were not liable for the duty on the imported base yarn, and the duty on the texturised yarn was not applicable to them.