1. The short question falling for determination in this appeal, filed by M/s Rajneesh Dyeing House, 3-A, Industrial Area 'A', Ludhiana, is as to what rate of duty was payable by them, as processors of grey yarn, which they cleared, as texturised yarn, under T.I. 18(ii) of the Central Excise Tariff, read with Notification No. 125/75-C.E., dated 12-5-1975.
2. The appellants plead to be engaged in dyeing of acrylic yarn, on job charges, which they receive from traders in market, or from manufacturers of hosiery goods, and were returning to them after dyeing. At the relevant time, Tariff Entry 18 covered three categories of yarn : and provided different rates of duty. The duty payable on texturised yarn was : "The duty for the time being leviable on the base yarn, if not already paid, plus Rs. 20/- per kg." 3. Notification No. 125/75 had only the effect of reducing the additional rate of Rs. 20/- per kg to that of Rs. 10/- ; description of the yarn, or the framework of duty-computation, remaining the same.
4. During the period 24-5-1976 to 28-2-1977, for which period differential duty, amounting to Rs. 64.680/- has now been claimed by the Department, yarn was cleared by the appellants on payment of Rs. 10/- per kg. as duty. Appellants plead that they operated under Central Excise licence, as job workers, and that clearances were effected on proper assessment and that all the statutory records, such as RG1, PLA and raw-material account, were maintained. However, a demand, by means of show cause notice dated 15-4-1977, was raised by the Superintendent of Central Excise, Range-1, Ludhiana, on the view that since the petitioners had not proved that duty on the base yarn, at the then effective rate of Rs. 24/- per kg, had also been paid ; duty payable by them for these clearances was Rs. 34/- per kg and, as such, they were liable to make up the difference in duty. Appellants' case, in reply sent on 21-1-1981, was that they had been dyeing acrylic yarn purely on job work basis, and that the said yarn was received from various customers for dyeing, and that the duty on this yarn had been already paid by the spinners or the customers. They submitted challans/gate passes in support of their plea, requesting for verification. During personal hearing, they produced further documents having a bearing on demand of duty on base yarn, and also certain confirmatory letters from parties to the effect that the base yarn had been purchased by them from open market or from a named manufacturer ; going to the extent of asserting that Central Exicse duty had been paid by the said manufacturer vide a specified gate-pass.
5. The demand was confirmed, in spite of evidence and clarifications furnished by the appellants, by the Assistant Collector on the view that the rate of Rs. 10/- per kg. was leviable on the bulked yarn only if it was produced out of duty-paid yarn, and that the appellants are required to produce proof of such payment which, according to the Assistant Collector, they had failed to do. The evidence furnished by them was ignored on the ground that challans merely furnished evidence of the quantity of yarn supplied to the appellants for dyeing and did not contain any duty particulars, and so far as other documents were concerned; there was no co-relating evidence.
6. The Collector (Appeals), by means of the impugned order, rejected the appeal taken to him against this order of the Assistant Collector, by referring to some earlier order passed by his predecessor, Shri G.S.Maingi, in an order dated 4-10-1983 in appeals filed by M/s J.B.Traders and Dyeing House and eight other firms, all from Ludhiana, on the same issue, and concurring with the view expressed therein.
7. Appellants assailed this order in the present appeal contending that it was an established principle that duty liability was on manufacturers of goods who, in the case of base yarn, would be spinners and, further, that in the scheme of the Excise Law, no clearance of excisable goods can be effected without payment of duty unless there is some statutory exemption and, as such, there is a presumption of discharge of duty liability at the stage of clearance of base yarn and that the lower authorities have erred in passing on the burden to the appellants to establish the duty-paid character of the base yarn. They rely on judgments of various high courts in this regard, particularly in the cases of 'Sulekh Ram and Sons' v. Union of India and Ors., '1978 E.L.T. (J 525)', decided by the Delhi High Court; 'Champala and Company" v. Collector of Central Excise, Bangalore-1 '1978 E.L.T. (J 492)'; Electric Lamp (India) Pvt. Ltd. v. Collector of Central Excise, Calcutta and Orissa and Ors. '1978 E.L.T. (J 84)'; and Empire Dyeing and Manufacturing Co. Ltd. v. V.P. Bhide and Ors., '1977 E.L.T. (J 34)'.
8. They further plead that, even though they had furnished enough evidence and material to show that duty had, in fact, been paid, or ought to be presumed to have been paid, but the authorities, instead of conducting verification, have assumed against the appellants which presumption was erroneous. They reiterated that the base yarn purchased from open market had to the treated as duty-paid in the absence of proof to the contrary; burden whereof was on the Department.
9. The appellants also plead the clearances were effected in full view of the Excise authorities on payment of duty as texturised yarn and, thus, the authorities have clearly erred in applying Rule 9 (2) of the Central Excise Rules, 1944, which operates only in the case of clandestine or surreptitious removals.
10. Shri S.K. Dhanda, Consultant, appeared for the appellants at the time of hearing and, after giving a brief history and narration of the facts, he pointed out that this Tribunal has given decision on an identical issue in the case of Capital Dyeing Company in Appeal No.E.D. (S.B.) 2804/83-D vide Order No. 210/84-D, dated 17-4-1984-1984(17) E.L.T. 544. He submitted that the position has not been correctly appreciated by the Department and that, even earlier, the Central Board of Excise and Customs had held the same view in re : Jai Glasskow, Jaipur-1982 E.L.T. 415'. He further emphasised that the duty liability in respect to base yarn was on the manufacturers or spinner, and that when appellants had shown that they had obtained it from open market-either from their customers or from hosiery mills-it had to be assumed that duty had been paid on the base yarn as held by Delhi High Court in the case of-Sulekh Ram and Sons- (supra).
11. On adjourned hearing, the appellants did not put in appearance and, by means of written submission, invited attention to other judgments on similar issue, since delivered by the Tribunal; namely-(Decent Dyeing Co. v. Collector of Central Excise, Chandigarh).
(ii) Order No. 260/84-D dated 8-5-1984 (Navrang Dying Co. v. Collector of Central Excise, Chandigarh).
(iii) Order Nos. 511 to 515/84-D dated 28-9-1984 ( Rampal Scientific Dyers and Ors. v. Collector of Central Excise, Chandigarh).
and prayed that their case being exactly identical, based on the same facts and pleadings, may be decided accordingly.
12. Shri K.C. Sachar, Departmental Representative appearing for the respondents, while conceding that the cases earlier decided by the Tribunal did arise out of similar facts as in the present case, stated that he would nevertheless want to make further submissions. He argued that the case of 'Sulekh Ram and Sons' was with reference to a notification differently worded and its ratio could not be wholly applied to the present case. According to him, the case, which had more bearing on the present appeal, is the one decided by the Supreme Court in the case of J.K. Steel Ltd. v. Union of India and Ors., 'A.I.R. 1970 S.C. (1173)', where their Lordships gave interpretation on the expression : 'duty for the time being leviable', and contended that this duty had to be as prevailing at the time of second clearance ; namely, that of tex-turised yarn in the present case.
13. He further argued that 'Sulekh Ram and Sons' case did not take note of the system of exemptions in the Excise Law and, in view of the fact that there could be cases, as noted in the 'J.K. Steel' case, where duty at the first stage was not paid due to some exemption enjoyed by the manufacturer, then the assumption of such duty having been paid could not arise. Shri Sachar contended that wording of the notification in the present case was more similar to another case decided by the Supreme Court, reported as Ahura Chemical Products Pvt. Ltd. v. Union of India '1981 E.L.T. 613 (S.C.)' and that, in view of the fact that appellants were claiming concessional rate of duty under exemption notification, the burden was on them to prove that they were so entitled. He also cited a judgment of Gujarat High Court in the case of Alembic Chemical Works Co. Ltd. Baroda v. Union of India and Ors., 1979 E.L.T. (J 258) in support of his contention that there could be cases where though Tariff imposes duty liability but, at a given time, duty may not have been paid due to certain exemptions but, at a subsequent stage, in the event of those concessions/exemptions having been withdrawn, the duty becomes again payable, as 'full duty' will be substituted for 'nil duty'.
14. When pointed out to him that all these arguments have been taken note of in the previous cases decided by the Tribunal, he insisted that all points, argued by him relying on the judgments of the Hon'ble Supreme Court in the cases of 'J.K, Steel' (supra) and 'Ahura Chemical Products Pvt. Ltd.' (supra), have not been dealt with, and reiterated, that the concept of duty, "leviable at the time', was very relevant and also the fact that different wordings of notifications entail different considerations.
15. We have given our earnest consideration in face of Shri Sachar's insistence in the matter but we are constrained to say that all these points have been examined, thread bare, in our earlier judgements on which the appellants placed complete reliance vide their letter dated 5-4-1985. There can be no disputing the proposition that the wordings of a given notification have to be seen in each case and interpreted accordingly but we find that the ratio of the Supreme Court judgment in 'Ahura Chemical Products Pvt. Ltd.' case completely defeats Shri Sachar's own arguments. It is pertinent to note that the conditions for exemption in that case were split into two parts; and where as the first part required proof of duty having 'already been paid', the alternative condition was only that of the raw material having been 'purchased from the open market'. Their lordships held that although the party's contention, that in the given situation the raw material could be treated as duty-paid, was not established because it was shown in that case that the manufacturer, from whom they had purchased goods, enjoyed exemption having manufactured the goods without the aid of power, but nevertheless it was held that the very fact that goods had been purchased 'from the open market' would entitle the party to the benefit of the exemption notification in that case.
16. It is noteworthy that their Lordships of the Supreme Court held that, in spite of the fact that it was positively proved in that case that duty had not been paid on the raw material by the manufacturer thereof by virtue of having availed of exemption from duty, but even then, on account of simple fact that they had been purchased from 'open market', relief from payment of further duty was held to be available to the party concerned.
17. The notification in the case before us is couched, on the other hand, in negative terms. We may further add that, in fact, it is the wording of the Tariff entry which is so framed and the notification has the effect of only reducing the additional duty of texturisation from Rs. 20/- per kg to Rs. 10/-per kg. The justification for including the rate of duty payable on the base yarn at the end of the processor, engaged in texturisation or dyeing of the yarn, would arise only if the Department is able to show that 'duty had not been paid' by the spinner or manufacturer of base yarn. We agree with Shri Sachar that the wording of individual notification is determinative of the whole issue and, in that view of the matter, we may say with all respect that the wording of the notification before their Lordships of the Supreme Court in the 'J.K. Steel' case being entirely different from the wording of the Tariff entry in the present case, Shri Sachar's insistence on the meaning given to the term 'duty leviable' is clearly misplaced.
18. Although, we are of the clear view that the way Tariff entry as well as the notification are termed, the appellants were not at all required to show that duty has been paid on the base yarn and that the Department had ail-along proceeded on a wrong assumption but, here, we find that the appellants had even discharged that burden by placing enough documentary evidence in the nature of gate-passes, letters from their customers/suppliers to show that duty had, in fact, be en paid.
In the absence of any verification, or attempt thereat, by the Department to falsify the said assertion, and show that duty in fact had not been paid, we do not think that the demand for differential duty from the appellants was at all justified.
19. In the view we have taken, we do not find it necessary to go into the question of applicability of Rule 9(2) of the Rules. We may, however, add that the issue is wholly academic because the show-notice, issued on 15-4-1977 in relation to the period 24-5-1976 to 28-2-1977, and the time, for raising demand under Rule 10 being, at the time, one year; the demand would have been otherwise within time.
20. In the result, we concur with the view taken by the Tribunal in earlier four sets of appeals, mentioned in paragraphs 10 and 11 above, and in view of what is discussed above, we allow the appeal and set aside the orders of the lower authorities and, consequently, the demand.