IMPORTANT POINT
In fiscal matters, where the claim of the assessee is borne out by the trade inquiries received by them and also the affidavits filed by persons dealing with the subject matter, a heavy burden lay upon the revenue to disprove the said materials by adducing proper evidence.

Headnote:(i) Central Excises and Salt Act, 1944-Tariff Item 68 as introduced to the first schedule from 1-3-1977-Nylon Twine-Meaning-Trade enquiry received by assessee and also affidavits filed by persons dealing with subject matter conclusively point out that Nylon Twine is considered as a kind of Nylon Yarn -It is to be classified under Item 18-Revenue failed to establish contrary-High Court directing Revenue to refund to assessees excess amount collected on basis that Nylon Twine falls under Item 68, is justified in law.
       Held; the conclusion reached by the High Court is fully in accord with the decisions of this Court and the same is justified in law. The burden of proof is on the taxing authorities to show that the particular case or item in question, is taxable in the manner claimed by them. Mere assertion in that regard is of no avail. It has been held by this Court that there should be material to enter appropriate finding in that regard and the material may be either oral or documentary. It is for the taxing authority to lay evidence in that behalf even before the first adjudicating authority. Especially in a case as this, where the claim of the assessee is borne out by the trade inquiries received by them and also the affidavits filed by persons dealing with the subject matter, a heavy burden lay upon the revenue to disprove the said materials by adducing proper evidence. Unfortunately, no such attempt was made. As stated, the evidence led in this case conclusively goes to show that Nylon Twine manufactured by the assessees has been treated as a kind of Nylon Yarn by the people conversant with the trade. It is commonly considered as Nylon Yarn. Hence, it is to be classified under Item 18 of the Act. The Revenue has failed to establish the contrary. (Para 15)
       (ii) INTERPRETATION OF STATUTES-Fiscal statutes-Interpretation of Items or Entries in;-Principles of- (Para 10)

JUDGMENT

Paripoornan, J.-Special leave granted in SLP (C) 11008 of 1988.

2. The above three appeals involve a common question of law, namely, whether "Nylon Twine" can be considered as "Nylon Yarn" so as to be covered by Item 18 of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as "the Act") as it stood prior to the Amendment of 1977.

"18 Rayon and Synthetic Fibres and Yarn

Tariff Description of Rate of duty Item goods Basic

18. Rayon and Synthetic Fibres and Yarn inclu- ding textured yarn, in or in relation to the manufacture of which any process is ordi- narily carried on with the aid of power :-

(i) Fibres and Yarn Rs. 85.00 other than Textured per kg. Yarn.

(ii) Textured Yarn The duty for produced out of the time being Base Yarn. leviable on the base yarn, if not already paid plus Rs. 20/- per kg.

(iii) Other Textured Rs. 105.00 Yarn per kg.

Explanation - I. "Fibres and Yarn, other than Textured yarn" , shall be deemed to include -

(i) man-made fibres;

(ii) man-made metallic yarn;

(iii) spun (discontinuous yarn containing not less than ninety per cent by weight of man-made fibres calculated on the total fibre content; and

(iv) man-made filament (continuous) yarn that has not been processed to introduce crimps, coils, loops or curls along the length of the include bulked yarn and stretch yarn.

Explanation - II. "Taxtured Yarn means yarn that has been processed to introduce crimps, coils, loops or curls along the length of the filaments and shall include bulked yarn and stretch yarn.

Explanation - III. "Base Yarn" means yarn falling under sub-item (i) of the this Item from which the Textured Yarn has been produced.

Explanation - IV. This item does not include mineral fibres and yarn."

3. It will be useful to note that from 1st March, 1977 a new item i.e. Item 68 was introduced to the first schedule to the Act which is to the following effect.

"Tariff Description of Rate of duty Item goods Basic

68. All other goods, not 1% Adv. elsewhere specified, manufactured in a factory but excluding-

(a) alcohol all sorts including alcoholic liquors for human consumption;

................

Item 18 was also amended in the following manner :

"II. Man-made filament yarns-

(i) Non-cellulosic-

(a) other than textured

(b) textured

Explanation : "Textured Yarn" means yarn that has been processed to introduce crimps, coils, loops or curls along with length of the filaments and shall include bulked yarn and stretch yarn.

(ii) Cellulosic;

(iii) Metallised."

4. We heard Counsel.

5. In this group, the main appeal is Civil Appeal No. 715/81. It is an appeal preferred by the Union of India (Revenue) against the judgment and order of the High Court of Bombay dated 9.4.1980 rendered in Special Civil Application No. 2974/78. In the other two cases, the judgment in special civil application No. 2974/78 was followed. The judgment in the said special civil application is reported in 1980(6) ELT 249 (Bom.).

6. The respondents-assessees manufacture "Nylon Yarn" and "Nylon Twine". They are doing so eversince 1962. Under first schedule, Item 18 of th

Click Here to Read the rest of this document

1996 Supreme(SC) 1409

IMPORTANT POINTIn fiscal matters, where the claim of the assessee is borne out by the trade inquiries received by them and also the affidavits filed by persons dealing with the subject matter, a heavy burden lay upon the revenue to disprove the said materials by adducing proper evidence.

Cases Referred (3)

IMPORTANT POINT
In fiscal matters, where the claim of the assessee is borne out by the trade inquiries received by them and also the affidavits filed by persons dealing with the subject matter, a heavy burden lay upon the revenue to disprove the said materials by adducing proper evidence.