9911796707
TMI Blog1985 (3) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... r which the said writ petition came to be filed may briefly be noted : (The respondent herein is a company manufacturing yarn) and it continues to carry on the business hitherto carried on by Madurai Mills Company Ltd., until its amalgamation with the respondent company. One of the products manufactured by the respondent is cotton/nylon duck. The above material was produced out of twisted cotton/nylon yarns by adopting the following process : The cotton yarn and nylon yarn are spun separately by the usual spinning process and they are thereafter twisted or mixed together with a view to make a combination thereof which ultimately is used in the manufacture of the above product viz., cotton/nylon duck. Nylon yarn and cotton yarn thus mixed ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember, 1974 wherein it is stated that the Ministry of Law had expressed the view that if the mixed yarn manufactured from duty paid yarn falls under a separate item and is a new commodity known to the market as such it will be liable to duty as a new product. Based on the said letter of the Central Board of Revenue dated 3rd September, 1974, the Assistant Collector of Central Excise issued again a corrigendum dated 21st September, 1974 reiterating what has been approved earlier. Thereafter, the Assistant Collector issued a show cause notice dated 17th February, 1975 as to why action should not be taken against the respondent for contravention of the provisions of Rules 173(b) and 175 of the Central Excise Rules, 1944 inasmuch as the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en is whether the respondent is liable to pay excise duty during the period in question viz., 3rd September, 1974 to 31st December, 1974 on the twisted yarn under tariff Item 18E. According to the learned Counsel for the respondent/writ petitioner tariff 18E before its amendment in 1977 will not take in twisted yarn. Tariff Item 18E before its amendment in 1977 was as follows : "Yarn, all sorts, not elsewhere specified, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power." 7. The learned Counsel for the respondent refers to tariff Items 18A to 18D and submits that Item 18E is a residuary clause and, therefore, it will cover yarn which is not elsewhere specified. "Twisted yarn" made of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of a manufacture, it cannot be brought under tariff merely because twisted yam is different from cotton yam and nylon yam out of which it is made of. This aspect of the matter has not been gone into by the excise authorities. The submission of the learned counsel for the respondent that tariff Item 18E is a residuary entry and it will cover only spun yam and not a mixture of cotton yarn and nylon yarn which has been already subjected to excise duty has also not been considered. In this view of the matter the show cause notice proposing to initiate action for contravention of Rules 173 and 175 has to be quashed with a direction to the appellant to consider the question of liability of the respondent for excise duty on twisted yarn in the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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