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Rampal Scientific Dyers Vs. Collector of C. Ex. - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1990)(45)ELT465TriDel
AppellantRampal Scientific Dyers
RespondentCollector of C. Ex.
Excerpt:
.....as stated in column 3 was demanded being the differential duty of rs. 24 per kg. leviable on the base yarn. the appellants contended that they were engaged only in dyeing yarn on collection of job charges and that the base yarn was not manufactured by them. the asstt. collector confirmed the demands and hence the appeals.3. shri harbans singh, advocate, appearing for the appellants, submitted that the appellants were not manufacturers of base yarn and could not be made liable to pay excise duty on base yarn. the burden of proving the particular rate of duty leviable was on the department and it was therefore for the department to establish that the duty of excise on the base yarn had not been paid. the appellants received the goods from the market in the normal course of their.....
Judgment:
1. All the above appeals involve common questions of law and by consent of parties there were heard and are being disposed of together. The appellants say that they are engaged in dyeing yarn. They used to receive base acrylic yarn from various traders in the market and return the same after dyeing. They collect job charges for this activity. The appellants submitted classification list which were approved by the Asstt. Collector. According to the appellants the yarn were cleared on payment of duty at the rate of Rs. 10 pet Kg. in terms of Notification No. 125/75. The appellants have also been submitting RT-12 returns every month which were approved by the Central Excise officers. While so show cause notices were issued on the respective dates for the respective amounts as given below :---------------------------------------------------------------Appeal No. Date of show cause notice Duty demanded-------------------------------------------------------------- 2623/83 07-4-1977 1,71,824.40 2533/83 29-4-1977 2,52,768.00 2681/83 29-4-1977 0,40,800.00 2702/83 29-4-1977 2,00,808.00 2819/83 07-4-1977 0,82,560.00-------------------------------------------------------------- 2. The excise duty as stated in Column 3 was demanded being the differential duty of Rs. 24 per Kg. leviable on the base yarn. The appellants contended that they were engaged only in dyeing yarn on collection of job charges and that the base yarn was not manufactured by them. The Asstt. Collector confirmed the demands and hence the appeals.

3. Shri Harbans Singh, Advocate, appearing for the appellants, submitted that the appellants were not manufacturers of base yarn and could not be made liable to pay excise duty on base yarn. The burden of proving the particular rate of duty leviable was on the Department and it was therefore for the Department to establish that the duty of excise on the base yarn had not been paid. The appellants received the goods from the market in the normal course of their manufacturing activity. Hence it was not possible for them to collect and adduce exhaustive proof for payment of duty on the base yarn. He stated that there was no valid or legal ground to demand duty under Rule 9(2) of the Central Excise Rules. The returns were submitted and had been approved by the Central Excise Department. He also placed reliance on the decisions of the Tribunal in Order No. 210/84-D = 1984 (17) E.L.T.544 (Tribunal) {Capital Dyeing Co. v. Collector of Central Excise, Chandigarh), No.D (Decent Dyeing Co. v. Collector of Central Excise, Chandigarh printed in 1989 (43) E.L.T. 782 (Tribunal)) and No.260/84-D {Navrang Dyeing Co. v. Collector of Central Excise, Chandigarh). He also submitted the ruling reported in 1978 (2) E.L.T. J 525 (Delhi) {Sulekh Ram and Sons v. Union of India). He submitted that the base yarn being available in the market had to be regarded as having paid the base duty on its removal from the spinning mill. It was for the Department to initiate proceedings against defaulting spinning mills, if any, for unauthorised removal of the base yarn and demand the base stage duty from those mills. He cited 1979 (4) E.L.T. 258 (Shree Niwas Tin Factory) for the proposition that the charging section has to be interpreted alongwith the relevant exemption as one whole ungraded scheme. The decision reported in 1978 (2) E.L.T. 350 {Hemraj Gordhandas v. Asstt. Collector of C. Ex. & Customs, Surat) was also cited to substantiate that there could be no room for any intendment in a taxing statute but regard must be had to the clear meaning of the words.

4. Shri K.C. Sachar, JDR, drew our attention to the tariff entry 18(1) and said that the rate of duty is "the duty for the time being leviable on the base yarn if not already paid plus Rs. 10 per Kg.". He submitted that the term "duty for the time being leviable" should be interpreted as one duty to be levied against one manufacturer not one duty to be shared by two manufacturers. He also placed reliance on AIR 1970 SC 1173 to lay emphasis on the concept of the term "duty leviable". He said that if the goods were exempted goods for the first manufacturer, he would not have paid the duty at that stage, and hence the duty for the time being leviable should be paid by the second manufacturer. In other words, he urged that the onus of proof was on the assessee to prove that the base yarn had suffered duty. He relied on the decision reported in 1981 (8) E.L.T. 613. He further submitted that the appellants relying on the exemption Notification No. 125/75 should prove that the liability was discharged by the person who had manufactured the base yarn.

5. The facts concerned in these appeals are not disputed. The appellants have received acrylic yarn from various traders in the market. They have produced relevant documents to show the quantity of yarn received by them. The appellants are engaged in processing of yarn. The appellants have also filed proof to show the quantity of yarn received by them from various traders. After processing, the yarn was delivered to the concerned persons. The appellants admittedly cleared the yarn on payment of duty at the rate of Rs. 10 per Kg. in respect to the job of texturising. According to the appellants the yarn were purchased in open market and hence the duty is to be deemed to have already been paid.

6. In the earlier orders of the Tribunal, cited above, identical question came up for consideration. In those rulings it has been held that the person receiving plain yarn from the market and who were simply texturising it were not the spinners of the base yarn and could not be called upon to pay the base stage duty. We are in entire agreement with this reasoning. Under Section 3 of the Central Excises and Salt Act, the liability to pay the prescribed duty is on the manufacturer of the excisable goods. By any stretch of imagination, it could not be said that the appellants were the manufacturer of the base yarn. Further, under Rule 9(1) of the Central Excise Rules, 1944, excisable goods cannot be removed from the place of manufacture without first paying the excise duty. Under those circumstances, it was held in Sulekh Ram's (supra) case that the goods lying in the market could be presumed to be duty paid. Apart from the presumption, the appellants have filed documents to indicate that they have received base yarn from the open market. The Department has not made any enquiries to conclude that these documents cannot be relied on. No enquiries were made regarding the supply of base yarn by those firms. It is true that the appellants claimed the exemption under Notification 125/75. The initial onus of proving that they are entitled to the exemption is no doubt on the appellants; but here the basic question is that the differential duty now demanded from them was payable on base yarn and is leviable at this stage, only "if not already paid". This negative factor is to be established by the Department, who now seeks to charge this additional duty. In this case, besides the notification, the Tariff Entry itself contemplates payment of duty for the time being leviable on the base yarn only "if not already paid". On the facts of these appeals, it is manifest that the appellants have discharged the initial onus that the duty for the time being leviable on the base yarn procured from the market had been paid by the respective suppliers. The rate of duty should be determined as on the date of clearance of the base yarn and not on the date of clearance of the texturised yarn produced out of the base yarn. We do not accept the contention of the Department that the words "duty for the time being leviable on base yarn" should be determined as on the date of the clearance of the texturised yarn. As the appellants have produced enough evidence to make out that the duty on the base yarn ought to have already been paid in the normal course, as the base yarn had already been cleared from the factory of its manufacture and they can also rely on the presumption arising out of their receipts from the open market. Under those circumstances, the onus of proving that the duty had not been paid on the base yarn, would shift to the Department. The Department has also relied on the ruling reported in AIR 1974 SC 859 (Collector of Customs, Madras v. D.Bhoornull). But that ruling has no application to the present facts because the goods concerned were of a foreign origin. The ruling reported in 1981 (8) E.L.T. 613 (Ahura Chemical Products Pvt. Ltd. v.Union of India) also does not apply to the present fact as the notification involved was totally different. The object of interpretation of a statute should be to avoid double taxation. Once the initial onus is discharged, by the assessee leading prima facie proof that the base yarn had or must have suffered duty, there is no warrant for collecting it again.

7. Hence on a careful consideration of the facts of the present cases, we are of the view that the approach of the lower authorities regarding the issues involved was not justified. We, therefore, set aside the impugned orders and allow the appeals.


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