TMI Blog1979 (5) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee under Serial No. 4 of a Notification No. 194/66, dated 19-12-1966 read with trade notice of 18-6-1963. The notification had been issued under Rule 8(1) of the Central Excise Rules, 1944 (hereinafter referred to as `the Rules') and limited the excise duty on the following categories of "Woollen yarn covered by item 18B of the First Schedule to the Central Excises Salt Act, 1944" (the Act for short) as follows : ***** The trade notice seems to have classified blended yarn as woollen yarn if it contained not less than 10% by weight of wool when mixed with stapple fibre only. Hence, Item 18B and the notification thereunder were applied and the assessee paid duty under Sr. No. 4 above. 3. On 13-6-1967 the Inspector of Central Excise, Rajpura (Respondent No. 4 in C.W. 1259/76) issued and served a demand notice calling upon the Rajpura Unit of the assessee to pay an additional duty of Rs. 4,182.04. It was now claimed that the assessee was liable to pay duty under Serial No. 2 (iii) falling under Item No. 18 of the First Schedule to the Act under a notification dated 16-10-1964 (No. 156/64) read with another dated 26-5-1967 (No. 82/67). Notification No. 156/64 exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of these proceedings, however, the assessee had to pay the duty as demanded, under protest. Thus the Rajpura Unit paid Rs. 19,500/- between 30-10-1967 and 24-11-1967 the Nagda Unit paid Rs. 2,18,241.27 for the period from 1-6-1967 to 17-9-1967 for clearing the yarn from the factories. Consequent on the judgments referred to in para 5 above the assessee made applications for refund of the duty collected in excess to the Department of Central Excise. The Nagda Unit had filed an application for refund earlier claiming a refund of Rs. 1,188,162.62 on the basis of the difference of duty between Serial No. 2(iii) of Notification No. 82/67 and that under Serial No. 4 of Notification No 194/66. In doing so, it was pointed out that, by a notification (No. 118/68) dated 18-5-68 the Department had added the words "or nil" in Serial No. 2(iii) of notification No. 82/67. According to the assessee, this amendment made it clear that prior to the amendment the item covered only blended yarn having some content of non-cellulosic fibre, and so the demand for additional duty under S. No. 2(iii) was wrong and illegal. This was rejected by the Assistant Collector on 7-9-1968 and by the Collector on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners under the exemption notification". Hence the present writ petitions. 9. Sri G.B. Pai, learned counsel for the petitioners, contended that, in view of the decision of this Court holding that Serial No. 2(iii) had no application, the petitioner was entitled to a refund of the duty collected. They could not refuse refund on the ground that duty could have been levied under Item 18 which there had in fact been no such levy and when further admitted a demand on the basis of that item would be barred by limitation. He also relied on the decision of the Gujarat High Court dated 15-1-1976 in The Ahmedabad Manufacturing and Calico (P) Ltd. v. Union of India and Others (Special Civil Application No. 1058 of 1972) to support an alternative contention that Item 18 "would not cover any cotton fibre or yarn which is from such natural fibre,' and that prior to 1972 blended yarn was not an excisable item at all so that it is not open to the respondents to justify the levy by reference to Item 18. 10. In my opinion, the contentions on behalf of the petitioner are well founded. The present petitioner manufactures a blended yarn, consisting of a combination of synthetic staple fibre and wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f cotton yarn all sorts and 18-B woollen yarn, all sorts. Therefore, a bare perusal of these entries make it abundantly clear that so far as this particular description of goods is concerned, it was sought to be made excisable item and these three entries only as synthetic yarn and cotton yarn and woollen yarn till 1972, when the new Finance Act of 1972 for the first time covered this whole topic of yarn by wider inclusion of entry 18E, covering such blended yarn produced from mixture of two or more of the fibres specified therein. Therefore, such blended yarn became excisable item only under the Finance Act of 1972 from the midnight of March 16/17, 1972 and prior to that such blended yarn was not an excisable item at all. The petitioner has categorically stated that it was a pioneer in this type of manufacture of belended yarn. These goods having been first introduced in the market, the legislature rightly made the goods excisable for the first time when the production became commercially viable production by widespread use of such manufacture of blended yarn by mixing the man-made fibre under natural fibre in the country. When the legislature covers the new item of manufacture by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the earlier stage when this blended yarn was treated as cotton yarn. There is also an inherent guidance in the other relevant entries at items 19 and 22 dealing with cotton fabrics or rayon or artificial silk fabrics respectively, where the legislature used the word "fabric" manufactured either wholly or partly. Therefore, if the same phraseology was intended even in case of yarn the legislature would not have refrained from adopting this familiar terminology which issued in the compaign items. Therefore, on no process of construction this new blended yarn produced by the company could be treated as excisable item for the earlier period before the Finance Act, 1972, which introduced clear, unequivocal Item No. 18E to cover such goods which were produced by the mixture of two or more fabrics man-made and natural. Therefore, the levy in the present case is clearly an ultra vires levy." The same reasoning applies to the blended yarn in the present case also and I am therefore of opinion that the attempt of the Revenue to support the levy under the main Item 18, CET cannot be upheld. 13. Secondly, even assuming that duty is leviable on these goods under the above item, it is not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of exemption available to it and chose to make an additional assessment based on Serial No. 2(iii). Having failed in this it should refund the additional duty collected and it cannot without proper assessment in law, claim duty on the basic of the main Item 18 at this stage. I am, therefore, unable to accept the contention of Sri Kataria that the assessee should be deemed to have admitted its liability to pay duty under Item 18. 15. The second point made by Sri Kataria was that, under Rule 11 where duty has been paid or adjusted and a repayment of it wholly or in part is claimed "in consequence of the same having been paid though inadvertence, error or misdescription" no refund shall be made unless the application for refund is made within three months of the payment or adjustment of the duty. This rule does not apply here, for it is not the case of the petitioner that duty has been paid in excess due to "inadvertence, error, misconstruction". It had to be paid by it, under protest, during the pendency of the appeals filed against the demands made. In 1977, Rule 11 has been amended to make clear that the above period of limitation for applications does not apply to refunds of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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