TMI Blog2001 (1) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... 765.55 72 8-3-1989 ₹ 2,13,765.55 31 22-11-1989 Rs. 49,330.51 2. In the affidavit filed in support of the writ petition, the petitioner mills would submit that the petitioner has got several spinning and weaving mills in the States of Tamil Nadu, Kerala and West Bengal and in Tamil Nadu, the Mills are at Madurai, Tuticorin and Ambasamudram; that one of the main merchandise manufactured and marketed by the petitioner company is Coats Threads , which has universal recognition for its quality and durability; that specification of the threads varies from country to country and the threads manufactured for the Indian market is to the specification No. 60/1 whereas in some other countries the thread specification varies from No. 60/1, 60/2 and 60/3; that the threads exported to a particular country must satisfy the specification of such countries; that the threads and yarns are one and the same; that by multi-folding and more twisting, yarns are made into threads; that all over the world, the yarns and threads are treated as one and the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52.03 Cotton yarn including sewing thread not containing synthetic staple fibres Nil 52.04 Cotton yarn including sewing thread, containing synthetic staple fibres Nil Chapter No. 54 54.04 Artificial filament yarn and sewing thread, including artificial monofilament of less than 60 deniers not textured Nil Chapter No. 55 55.05 Yarn (including sewing thread of synthetic staple fibres) Nil that the above descriptions unambiguously, show that the yarn includes sewing threads because yarns are spun into threads that the subordinate officials misconstruing the provisions of the Act, ordered that the threads would sustain another incidence of excise duty though the threads are spun out of the duty paid yarn; that challenging the legality of the said decision, the petitioner filed writ petition and the same was being admitted and the authorities wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the petitioner to show cause why the rebate claims preferred by them should not be rejected in terms of Notification 197/62; that an explanation was submitted on 7-11-1989 stating that Rule 12 provides for rebate of duty paid on all the excisable goods exported out of India and Notification 197/62 specifies those goods enumerated in the table which are liable for refund of goods specified in the Schedule of Central Excise Tariff , other than the goods A listed against Sl. Nos. 2 to 8. As a whole, the destination of any country or territory outside India; that threads are not mentioned as the excluded item and therefore, excise duty paid on the exported goods are liable to be refunded and the contention in the show cause notice that Notification 197/62 does not allow any rebate as they are not sustainable in law; that on 28-9-1999, the first respondent also afforded personal hearing and passed orders on the very same day stating that proviso (1) of the Notification 197/62, dated 17-11-1962 stipulated on the excisable goods should be exported directly from the factory unless and otherwise provided in the Table to the said notifications or permitted by the Board and in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents, they have submitted that the threads are manufactured out of the duty paid yarns received from their sister concern, by multi-folding and twisting them into threads; that after export, the petitioner filed rebate claim for the refund of duty paid on yarns with the Maritime Collector, Chennai for export of sewing threads; that Proviso (i) of Notification 197/62, dated 17-11-1962 as amendment issued under Rule 12 of the Central Excise Rules, 1944, for claiming rebate stipulates that the goods are to be exported after payment of duty in cash direct from a factory or a warehouse ; that inasmuch as the above condition was not specified for the export of thread by the petitioner, the Maritime Collector has rejected the rebate claimed, by his order dated 28-12-1989 for item Nos. 1 to 4 falling under AR4s Nos. 44, 52, 58 and 72 rejecting AR 4 Ne31 also; that it is true that yarn includes thread and duty is not liable on thread which is manufactured out of the duty paid yarn but the rejection of the rebate claim was only for the non-fulfilment of condition laid down in Notification No. 197/62, dated 17-11-1962 as amended, which is fully in accordance with law, wherein, the sti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an exporter in sewing thread and the writ petition has been instituted against refusal to refund the excise duty, which the petitioner is entitled to. As pleaded in the writ petition, the petitioner company getting the duty paid yarn from its sister concern and multi-folding the same into thread was exporting to Indonesia under AR 4A Nos. 44, 52, 58 and 72 and since the excise duty paid on such exported threads the petitioner is entitled to get the refund, they filed the claim application claiming an amount of ₹ 6,91,585.59 ps. from the first respondent Maritime Collector and since he rejected the application, filing an appeal before the Commissioner, Excise, for refund of excise duty, which also came to be rejected for refund on ground that the refund of excise duty is not for the export of sewing thread, but if it had been paid only in cotton yarn; that it is Central Excise Tariff Act, 1985 which is relevant; that under Chapter XI, all types of yarn and fabric and other products are classified; that under Section 11 of the Central Excise Tariff Act, 1985, various textiles and textile articles are classified; that Note 3 of Section XI lays down the Heading Nos. 52.03, 52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly entitled to the return of the excise duty. 12. In reply, the learned counsel appearing on behalf of the respondents would submit that Centenary Mills pays excise duty on yarn but the mill seeking the rebate is Madura Coats Limited; that the claim of the petitioner is that the yarn and clothes are the same; that the judgment reported in 1996 (88) E.L.T. 644 (S.C.) is only an obiter dicta and the proposition made is that all the threads are made of yarn and therefore all the yarns are threads and amounts saying all men are mortal and therefore all mortals are men; that there could also be other things and hence the argument of the learned counsel for the petitioner that yarn is thread and yarn and thread are one and the same and therefore the duty paid on yarn manufactured at one mill even after getting converted into thread in the other mill would become entitled to get the rebate, is unacceptable. The learned counsel would also cite a judgment of the Tribunal delivered in Vardhman Spg. Gen. Mills Ltd. v. Collector of C. Ex., Chandigarh reported in 1999 (105) E.L.T. 121 (Tribunal) wherein it has been held: We have carefully considered the pleas advanced from bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn has come into being which is known in the market and that PPRF is treated differently, from polyester spun yarn and rayon filament yarn. Therefore, the Tribunal came rightly to the conclusion that this is a separate and distinct item.... 15. Continuing to argue, the learned counsel for the respondents would submit that yarn and thread are one and the same for which duty shall be paid at the yarn stage; that the operative portion of the order passed by the authorities concerned rejecting the claim of the petitioner is to the basic reasoning that the duty paid on thread stage 16/2; that the duty has not been paid at the thread stage 16/2 but only at the yarn stage 16/1 and hence the petitioner is not eligible to get the rebate and would pray to dismiss the writ petition. 16. In clarification, the learned senior counsel for the petitioner would further submit that two Division Benches of this Court held that thread is yarn respectively reported in (1) Madura Mills Company Limited v. Government of Madras (1970) 25 STC 407 and (2) 1992 (Vol. 92) STC 262 (supra) and also by a single Judge of this Court in W.P. No. 15469 of 1990, dated 24-9-1999. 17. In clarification, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition was not complied with for the export of the threads by the petitioner, the respondents rejected the rebate claimed by the petitioner. It would be admitted on the part of the respondents that yarn includes thread and duty is not liable to be paid on threads, which is manufactured out of duty paid yarn. But the reason assigned on the part of the respondents for rejection of the rebate claimed by the petitioner is that only for the non-fulfilment of the condition laid down in Notification No. 197/62, dated 17-11-1962, which stipulates the goods are to be exported after payment of duty in cash directly from a factory or a warehouse and that inasmuch as the goods viz., threads, have been exported from the petitioner s factory, the same is not entitled for payment of rebate under Rule 12 of the Central Excise Rules, 1944. 21. There is no controversy regarding the manufacture of the items of goods enumerated at the end of Para 1 of this order forming part of the prayer column of the writ petition have been exported by the petitioner on different dates to Indonesia in the name of Coats Threads . There is also no controversy so far as the said items having suffered excise d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty was paid on the threads, that payment of excise duty on yarn by the sister concern of the petitioner s is not relevant to the issue. 24. Therefore, in the above circumstances, the relevant question that is to be answered here is whether the excise duty paid on yarn by the sister concern of the petitioner s is not relevant for consideration for payment of rebate under Rule 19 of the Central Excise Rules, 1944 since no duty was paid on them in the form of threads when they got exported? So far as the payment of excise duty is concerned, the yarn is thread and once the excise duty is paid on yarn, no separate excise duty need be paid on the threads and therefore the claim of the petitioner that yarn is thread and they are one and the same and if duty is paid in any one of these forms, the other form does not attract payment of excise duty. This position has been made clear not only by the two Division Bench decisions cited on the part of the petitioner but also by the Apex Court judgments cited on the part of the petitioner and this position is also acceptable on the part of the respondents. But, their arguments are that since the excise duty is paid in the form of yarn by the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents cannot in any manner come forward to claim that the thread, which has been twisted from the yarn did not suffer the excise duty so as to deny the rebate that is lawfully claimed by the petitioners. Goods are to be exported after payment of duty directly from the factory or a warehouse , it is clarified that it is the same goods (yarn) which after the payment of duty that is exported from the factory in the form of threads. It is also not the case of the respondents that because the yarn of the sister concern by the petitioner mills having been exported in the form of threads, the Government have suffered any loss or that the petitioners have circumvented or violated any law and therefore the denial of the rebate by the respondents is not only unreasonable and arbitrary but erroneous as well. No valid or acceptable reason has been offered on the part of the respondents to reject the claim of the petitioners excepting to misinterpret the meaning of the rule. Interpretations must only render clarity and cannot deny the due of the petitioner. 26. Whether the yarn is from the petitioner mills or from its sister concern is immaterial. Relevancy lies whether that yarn, wheth ..... 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