LexCOLLECTOR OF CENTRAL EXCISE, CHANDIGARH versus DECENT DYEING CO.
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A COLLECTOR OF CENTRAL EXCISE, CHANDIGARH v. DECENT DYEING CO. DECEMBER 7, 1989 B [SABYASACHI MUKHARJI AND B.C. RAY, JJ.J Central Excises and Salt Act, 1944: Section 35L(b) and Rule 9(2)-Assessee-Dyeing acrylic yarn on 1ob charges-Levy of excise duty-Legality of. The Respondent Company was in the business of dyeing acrylic C yarn received from traders and manufacturers of hoisery goods on job basis. It was paying duty at the rate of Rs.IO per K.G. in terms of Notification No. 125/75-CE dated 12.5.1975 on the presumption that base yarn had discharged duty liability before it was received for dyeing. A show casue notice under section 9(2) of the Central Excise D Rules, 1944 was issued by the Assistant Collector of Central Excise demanding an amount of Rs.4,300 as central excise duty © Rs.24 per K.G. on 180 Kgs. for the period May 1976 to July 1976. The demand was resisted by the Respondent Company contending that duty on base yarn was payable by the Manufacturers and the burden of showing that this had not been paid by the Manufacturers was on the Revenue which E was not accepted and on appeal by the Assessee the Appellate Collector of Central Excise confirmed the demand. On further appeal, .however, the Appellate Tribunal upheld the contention of the Respondent holding that the Manufacturer was liable to pay duty on the base yarn since purchasers could naturally assume that the duty on base yarn would have already been paid by the Manufacturer and that it was for the F Department to verify the fact of such payment and take action against the manufacturer, if duty had not been paid particularly when in this case the Assessee had disclosed the names of persons/manufacturers from whom it had received the yarn for dyeing while the matter was pending before the Collector. G Dismissing the appeals preferred by the Revenue, this Court, HELD: Excise is a duty on manufacture. The liability of payment of this duty is on the manufacturer. The language of the Notification No. 125/75 dated 12th May 1975 indicates that only the duty for the time being leviable on the base yarn, if not already paid, plus ten rupees per kg. was the liability. The description of manufacture was textured H yarn produced out of base yarn. [434B] 430 .... COLLECTOROFCENTRALEXCISEv. DECENT DYEING [M "<HARJl,J.] 431 It would be intolerable if the purcnasers were required to as- certain whether excise duty had already been paid as they have no means of knowing it, .It has to be borne in mind that duty of excise is jlrimarily a duty levied on a manufacturer or a producer in respect of the c_ommodity manufactured or produced, A processor is in the similar position as purchaser of the goods, [434D-EI Sulekh Ram & Sons v, Union of India & Ors., [1978[ ELT J 525 and Governor General in Council v, Province of Madras, 72 Indian Appeals 91, referred to. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2151- 52 (NM) of 1986 etc. A B From the Order dated 8.5. 1984 of the Customs Excise and Gold C Control/Appellate Tribunal, New Delhi in Appeal No. 2530/83-IJ & Cross objections 27/84, Order No. 258/84-D and Misc. Order No. 67 84-D. A.K. Ganguli, P. Parmeswarnn and Hemani Sharma for the Appellant. D Gobinda Mukhoty and P .N. Gupta for the Respondent. The Judgment of the Court was delivered by SABY ASA CHI MUKHARJI, J. This is an appeal under section 35L(b) of the Central Excises & Salt Act, 1944 (hereinafter referred to as 'the Act') against the judgment and order of the Customs, Excise and.Gold (Control) Appellate Tribunal, New Delhi (hereinafter refer- red to as 'the Tribunal') dated 8th May, 1984. The appeal is by the revenue. The respondent, Decent Dyeing Co., was dyeing acrylic yam on job charges. The acrylic yam was being received by the respondent from traders in the market or from the manufacturers of hoisery goods and were returning the same to them after completing the required process. The respondent was paying duty at the rate ofRs.10 per kg. in terms of notification No. 125/75-CE dated 12th May, 1975 on the presumption that base yam had dis- charged duty liability before it was received for dyeing. A show cause notice requiring the respondent to show cause to the Assistant Collector of Central Excise as to why central excise duty amounting to Rs.4,300 at Rs.24 per Kg. leviable on 180 kgs. (as applicable to base yam under tariff item 18(i) of the Central Excise Tariff) should not
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