TMI Blog1986 (4) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Bombay Port a consignment of what was described in the covering invoice 3641, dated 6-2-1978 as Bulked Nylon Fabric - Your code No. E 02 NN . They filed a bill of entry for clearance of the goods describing them therein as Nylon Woven Dipped Diffusion Resistance Fabric. Goodyear Code EO2 NN . The goods were assessed to duty as shown below : (a) basic customs duty (leviable under the First Schedule to the Customs Tariff Act, 1975 - hereinafter referred to as the Tariff Act) - under Heading 59.01/15 of the First Schedule to the Tariff Act (hereinafter referred to as the Import Tariff Schedule ) - at 100% ad valorem + 20% plus (b) additional duty of customs (hereinafter referred to as additional duty ) on the above fabrics (comprised in the goods) corresponding to the excise duty leviable - under item No. 22(1) of the First Schedule to the Central Excises Salt Act, 1944 (hereinafter referred to as CET ). - at 20% ad valorem + Rs. 5 per sq. metre; plus (c) additional duty corresponding to the excise duty leviable - under item No. 22(3), CET as fabrics impregnated, coated or laminated with preparations of cellulose derivatives or other artificial pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of additional duty under the 1957 Act read with notification No. 179/72-C.E. and Notification No. 109/75 C.E., dated 30-4-75 at 5.5% ad valorem [item (d) - para 2.0] - the additional duty leviable under the Additional Duty Rules, 1976 under item 18 of CET was Rs. 6.50 per kg. vide Notification No. 28/75, dated 1-3-1975 [item (f) - para 2.0]. 2.4 On the above basis, the Appellate Collector allowed the appeal and ordered consequential refund. He added that of all the ingredients of additional duty enumerated, only those indicated at items (e) and (f) - (para 2.0) - were to be levied. 3.0 On scrutiny of the appellate order, the Central Government formed a tentative view that - (i) the finding of the Appellate Collector that the base fabric being unprocessed, did not attract additional duty corresponding to item 22(1) CET, by virtue of Notification No. 80/69 was correct; (ii) the order was otherwise not correct in law on the question of levy of additional duty for the following reasons : (a) it appeared to the Central Government that the goods were in the form of woven fabric, composed of nylon yarn, treated with artificial resin. As such the levy of additional duty at 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late Collector could not have done this and this part of the impugned order should be set aside. Shri Salve s reply to this is that, though initially no claim was made in this behalf, since the show cause notice has re-opened the assessment, Goodyear had the right to contest the notice which it had done in the reply to the notice and, in law, had acquired the right to press for refund on this score. Shri Ohri, on the other hand, vehemently contests this stand and submits that no new case can be set up by the respondent in reply to the show cause notice, the claim not having been made at an any earlier stage. 5.1 We do not agree with the learned Sr. DR Though this aspect of the dispute was not raised before the Assistant Collector nor even before the Appellate Collector, the latter came to a finding on the material before him, that the fabric was not a processed, coated or impregnated fabric, but one woven from nylon yarn treated with artificial resin and that, therefore, the fabric was unprocessed. In the show cause notice, it is stated that the imported goods are in the form of woven fabric, composed of nylon yarn treated with artificial resin and as such the levy of additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port the view taken by the Appellate Collector. Otherwise, one would expect the report to say that the fabric was found to be treated/ coated/impregnated with artificial resin. 5.4 Now, the invoice dated 6-3-1978 contains an amplified description of the goods as Nylon Woven Dipped Diffusion Resistant Fabric (emphasis supplied). The certificate of guarantee (dated 4-5-1978 from the suppliers) setting out the specification data also describes the goods as RFL dipped and diffusion resistant nylon woven chafers ... (emphasis added). It .is this RFL dipping that is inter alia explained in the certificate dated 9-3-1981 as Resorcinol - Formaldehyde - Latex system. This is prima facie evidence of the acceptability of the certificate dated 9-3-1981. This read with the Chemical Examiner s report ( It is composed of nylon yarn treated with artificial resin ) would point to the inference that the fabric was not coated or impregnated with resin. The fabric would appear to have been dipped in the aforesaid RFL finish. The Revenue has not produced any evidence to the contrary. Even leaving the certificate dated 9-3-1981 out of consideration, the chemical examiner s report shows only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reparations of cellulose derivatives or of other artificial plastic materials. The rate of duty was indicated as The duty for the time being leviable on the base fabrics, if not already paid . The show cause notice, as we have seen, proceeds on the basis that the base fabric is unprocessed. Notification 109/75-C.E., dated 30-4-1975 exempts unprocessed rayons and artificial fabrics falling under item No. 22(1) of the CET from payment of the whole of the additional excise duty leviable under the 1957 Act. We fail to see how this notification is contended by revenue to be not relevant and not applicable to the instant case, particularly in the context of the admitted position that the base fabric is unprocessed. In this view, notification No. 179/72-C.E., dated 24-7-1972 is not applicable to the subject goods. For the reasons spE.L.T. out earlier in para 5.3 and 5.4, the subject goods would also not attract additional excise duty under item No. 22(3) of the First Schedule to the 1957 Act and hence no corresponding additional duty of customs. 7.0 The third issue pertains to the additional duty of customs leviable on the nylon yarn content of the imported goods under the Addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o into the technical aspects of the question. For, item No. 18 (ii) which covers textured man-made filament yarn, contains an explanation to the following effect : Textured yarn means yarn that has been processed to introduce crimps, coils, loops, or curls along the length of the filaments and shall include bulked yarn and stretch yarn. Therefore, it is not open to argument whether bulked yarn is textured yarn or not. In view of the above explanation, bulked yarn is certainly textured yarn for the purpose of item 18(ii). When this was pointed out to the learned Counsel for Goodyear, he did not advance any further arguments on the point whether bulked yarn was or was not textured yarn. 7.5 However, it is Shri Salve s contention that the rate of duty applicable to the yarn is Rs. 6.50 per kg. in terms of S. No. 3(b) (vi) of Notification No. 28/75, dated 1-3-1975. But as correctly pointed out by the learned Sr. DR, this notification, as is evident from the preamble, applies to item No. 18 (i) of the CET, which covered rayon and synthetic fibre and yarn other than textured yarn. Evidently, the notification is not attracted in the present case and, therefore, its benefit is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the textured yarn comprised in the imported goods answered to the description textured yarn produced out of base yarn and fell under S.No. 1 of the Table under Notification No. 55/78-C.E. 7.7 In response to a query from the Bench whether in view of the provisions of Section 3 of the Customs Tariff Act, 1975, the higher of the two rates would not apply, Shri Salve submitted that since the texturised yarn in question squarely fell under the description given against S.No. 1 of Notification No. 55/78, there could be no question of different rates for the same goods and, therefore, the highest rate being attracted. In this connection, Shri Salve contended that the rule that the highest rate would be attracted applied only to goods which are not manufactured in India. If like goods are manufactured in India, the additional duty of customs cannot exceed the excise duty applicable to like goods; it cannot be levied at a higher rate. Since, in India, textured yarn manufactured out of base yarn attracted duty only as shown against S. No. 1 of the Table in Notification 55/78, that was the rate of additional duty of customs applicable to imported goods and not any higher rate. 7.8 On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d yarn in Notification 55/78. This contention has, in our opinion no substance. The description of the article in the First Schedule to the Central Excises and Salt Act is Textured yarn . Textured yarn produced out of base yarn is merely descriptive of the process of manufacture. For duty purposes, Notification No. 55/78 describes (and fixes a different concessional rate of duty for) textured yarn produced out of base yarn separately from other textured yarn. This itself shows that textured yarn is liable to excise duty at different rates, depending on the process of manufacture. The excise duty leviable on textured polyamide yarn of above 750 deniers would depend on ihe process of manufacture. It is Rs. 6.50 [Sl. No. 3(b) (vi) of Notification No. 28/75-C.E.] plus Rs. 5/-per Kg. (Col. 3 against Sl. No. 1 of Notification 55/78-C.E.), if such textured yarn is produced out of base yarn. If it is produced otherwise, the rate of duty is Rs. 24.60 per kg. [Sl. No. 2(a) (v) of Notification 55/78]. In such a situation, the yarn content of the imported fabrics would attract duty at the higher rate viz. Rs. 24.60 per kg. (plus special excise duty as may be applicable). 10.0 Summing up, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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