TMI Blog1983 (6) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... is being treated as an appeal before the Tribunal and is being disposed of accordingly. 3. The appellants are a composite mill and manufacture inter alia cotton yarn falling under T.I. 18A CET and cotton fabrics falling under Item 19 CET. Further, the appellants captively consumed the cotton yarn in the manufacture of cotton fabrics. The appellants were served a Show Cause-cum-Demand Notice dated 14-3-1977 for ₹ 1,30,046.40. This sum was demanded as being the differential duty on the ground that the yarn duty element paid by way of compounded duty ought to have been included in the assessable value of the cloth cleared by them during the period 16-3-1976 to 28-2-1977. The appellants represented to the Assistant Collector on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Salt Act, 1944 (hereinafter referred to as the Act) and the prices declared by them for their fabrics, satisfied all the requirement of a normal price. The very purpose of adopting a special procedure for levy of duty on yarn was to defer it from the stage of production to the point of removal of the fabrics and, therefore, inclusion of the yarn duty levy in the assessable value of fabrics would tantamount to double taxation. Excise is a tax on production and real value should be composed of manufacturing cost plus manufacturing profit. The manufacturing cost of cotton yarn is already included in the assessable value of cotton fabrics and hence the question of inclusion of compounded yarn duty in the value of fabrics is not tenable in law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... composite mills, the Government extended the concession of compounded levy on cotton yarn and provided that the duty leviable on yarn should be collected not at the spindle point but at the time when the cotton fabrics are cleared from the factory. We are of the view that existence of this special procedure of collection of duty does not mean that duty on yarn has been exempted. As provided under Item 18 duty on yarn has to be paid, but the stage and manner of its collection had only changed. Thus what has happened is that collection of duty on yarn has been deferred to the stage of clearance of fabrics. 7. The expression such goods appearing in Section 4(4)(d)(ii) of the Act refers to the fabrics sought to be cleared. For computing th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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