VARELI WEAVES PVT. LTD. AND ANR versus UNION OF INDIA & ORS.

Citation: [1996] 2 S.C.R. 1134 · Decided: 27-02-1996 · Supreme Court of India · Bench: S.P. BHARUCHA, B.L. HANSARIA · Disposal: Case Partly allowed
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Judgment (excerpt)

A 
VAREL! WEA YES PVT. LTD. AND ANR. 
v. 
UNION OF INDIA & ORS. 
FEBRUARY 27, 1996 
B 
LS.P. BHARUCHA AND B.L. HANSARIA, JJ.] 
Customs Ta1iff Act, 1975: Section 3. 
Central Excise Rules, 1944: Rule 8(1). 
C 
Imp01ted Partially Oriented Yam (POY)-CounteJVailing duty-Appel-
lants claim for exemption under Notification dated 28th Feb1Uary 1982-Basis 
of claim th°' POY was of 100 deniers and above but not above 750 
deniers-Authorities treated the POY imported by the appellants as falling 
within the slot of 75 deniers and above but below 100 deniers-They did so 
D upon the basis of a circular dated 24th September, 1980, issued by the Central 
Board of Excise & Customs which stated that POY was assessable to counter-
vailing duty and excise duty at the final denierage stage, that is to say, after 
the POY had been textunsed-W!it challenging levy by appellant dismissed by 
High Court on the ground of lack of jwisdiction-Appeal before Supreme 
Cowt-Held countervailing duty must be levied on goods in the state in which 
E they are imp01ted-T71e POY imported by the appellants fell in the slot of 100 
deniers and above but not above 750 deniers-It was, therefore, liable to that 
rate of counte1vailing duty as was provided for in the clause (iv) of the 
exemption notification-T7ie circular upon the basis of which the duty was 
levied having been issued in Delhi, the Delhi High Court had jurisdiction to 
F 
ente1t~in the appellants' writ petition. 
Klislon Textu1iser Pvt. Ltd. v. Union of India, (1989) 44 ELT 448, Vareli 
Exports Pvt. Ltd. and Another v. Union of India and Ors., CA No. 1165 of 
1983 decided by Gujarat High Court, approved. 
G 
CIVIL APPELLATE/ORIGINAL JURISDICTION: Civil Appeal 
H 
No. 5318 of 1983. 
From the Judgment and Order dated 27.1.83 of the Delhi High Court 
in W.P. No. 2405 of 1982. 
With 
1134 
~r 
} 
VARELIWEAVES PVT. LTD.v. U.0.1. 
1135 
Writ Petition (C) No. 3881 of 1983. 
(Under Article 32 of the Constitution of India.) 
Soli J. Sorabjee, P.H. Parekh and Ms. Sunita Sharma for the Appel-
lants. 
Joseph Vellappally, V.K. Verma and N.D.B. Raju for the Respon-
dents. 
The following Order of the Court was delivered : 
A 
B 
A common question arises in the Civil Appeal and the Writ Petition. C 
The Civil Appeal is directed against the order of a Division Bench of the 
Delhi High Court summarily rejecting the appellants' writ petition upon 
the ground of lack of jurisdiction . 
• The appellants imported partially oriented yarn (POY). They 
claimed for the purposes of countervailing duty (additional duty) the D 
benefit of an exemption notification dated 28th February, 1982, issued 
under Rule 8(1) of the Central Excise Rules whereby manmade fibres and 
yarns were exempted from excise duty as therein stated. The controversy 
was whether the POY imported by the appellants should be taken to fall 
within item (iv) under the head Polyester yarn relating to POY of 75 E 
deniers and above but below 100 deniers or within item (iii) relating to 
POY of 100 deniers and above but not above 750 deniers. It was the case 
of the appellants that the POY imported by them was entitled to exemption 
upon the basis that it was of 100 deniers and above but not above 750 
deniers. The authorities treated the POY imported by the appellants as 
falling within the slot of 75 deniers and above but below 100 deniers and F 
they did so upon the basis of a circular dated 24th September, 1980, issued 
by the Central Board of Excise & Customs which stated that POY was 
assessable to countervailing duty and excise duty at the final denierage 
stage, that is to say, after the POY had been texturised. 
Learned counsel for the appellants submitted that there was no G 
warrant for levying countervailing duty upon imported goods at a stage they 
would reach subsequent to their import after undergoing a process. They 
had to be subjected to duty in the state in which they were when imported. 
Reference was made to the judgment of a Single Judge of the Bombay High 
Court in Kris/on Texturiser Pvt. Ltd. v. Union of India, (1989) 44 ELT448 H 
1136 
SUPREME COURT REPORTS 
(1996] 2 S.C.R. 
A 
[S.P. Bharucha, J.], which was followed by a Division Bench of the High 
Court of Gujarat in Special Civil Application No. 1165 of 1983, Vareli 
Exports Pvt. Ltd. and Another v. Union of India and Others, where it was 
so held. 
B 
Learned counsel for the respondents fairly stated that the view taken 
in these judgments was unassailable. 
The circular upon
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