TMI Blog1990 (11) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... rved the order. 2. The facts, in short, are that under Notification No. 132/77-C.E., dated 18-6-1977, yarn used by composite textile mills in the manufacture of cotton fabrics was exempted from the payment of Central Excise Duty. This notification was withdrawn from the mid-night of 14th/15th July, 1977. During the period from 18-6-1977 to the midnight of 14/15-7-1977 the respondents manufactured cotton fabrics using cotton yarn manufactured in the same composite mill. The fabrics lying in stock on 14/15-7-1977 were cleared later on and the Department charged Central Excise Duty on the cotton yarn contained in the fabrics. The respondents filed a refund claim for the duty on yarn on the ground that the duty on yarn was not payable in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Collector (Appeals) by filing the present appeal before this Tribunal. 3. In the case of M/s. Aryodaya Spinning Weaving Co. Ltd. (supra), the Honourable Gujarat High Court held that since Clause (b) of the 2nd proviso to Notification No. 226/77-C.E. sought to give retrospective effect to imposition of duty on cellulosic spun yarn and cotton yarn which were fully exempted from payment of duty under Notification No. 132/77, dated 18-6-1977, therefore, it was ultra vires of the rule making powers of the Central Government under Rule 8 of the Central Excise Rules, 1944 in so far as it related to the period prior to 15-7-1977. It was also held by the Hon ble High Court that in the case of yarn, duty was leviable at the spindle stage, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removal of the excisable goods is the rate applicable under Rule 9A of the Central Excise Rules. In the present case, the yarn was removed from the spinning section to the weaving section of the respondents mill and used in the manufacture of cotton fabrics prior to 14/15-7-1977. The duty at the rate prevailing on the dates of removal of the yarn from the spinning section to the weaving section are the dates of removal of the yarn for the purposes of Rules 9 and 49 of the Central Excise Rules. Prior to 15-7-1977 the yarn was fully exempted from duty under Notification No. 132/77-C.E., dated 18-6-1977. In the circumstances, Central Excise Duty was not payable on the yarn in dispute. We, therefore, uphold the impugned order and dismiss the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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