S. Duggal, Member (J)

1. The two appeals captioned above, filed under the provisions of Section 35B(l)(c) of the Central Excises Salt Act, 1944 (hereinafter referred to as the Act) raise questions as to classification of yarn, described as double/twisted yarn stated to be made out of duty-paid, spun yarns, of different compositions.

2. The appellants claim to be manufacturers of various types of yarn, falling under Items 18, 18B and 18E of the Central Excise Tariff (hereinafter referred to as the CET) and further that after bringing several varieties of duty paid spun yarn in the factory, in relaxation of the provisions of Rule 51-A, the process of doubling the said yarn is undertaken, and thereafter clearances effected on payment of duty under T.I. 68.

3. The controversy arose when the classification list, which was filed on 2-5-1978 indicating all these doubled or twisted yarns as assessable under T.I. 68 was not approved as submitted, and by order dated 12-9-1978, the Assistant Collector directed that revised classification list be filed indicating these products, known as "doubled yarns", to be falling under T.I. 18B(ii) of the CET, and that duty be paid accordingly.

4. Whereas, it would appear that revised classification list, as directed, was filed under protest and so were price lists, and a representation to the Collector was also made against this revision of the classification by the Assistant Collector, no statutory appeal against the order of the Assistant Collector was taken to the Appellate Collector. However, inspite of no decision having been taken expressly by the Collector on the appellants' representation, the appellants continued clearance of the goods by paying excise duty as under T.I. 68 apparently without any objection, and with the concurrence of the concerned excise authorities.

5. This position prevailed till a notice was issued to the appellants; firstly, on 22-1-1979 calling upon to show cause as to why after classification of the goods under item 18B(ii), differential duty covering the period May 1978 to September 1978 and amounting to Rs. 91,627.30P be not recovered from them. The details as to how the demand was worked out were contained in the statement enclosed as Annexure A to this notice (pages 7-8 of the Paper Book). This was followed by a corrigendum dated 6-7-1979 altering the amount of the demand from Rs. 91,627.30 to Rs. 97,878.16 P, elucidated by means of a statement enclosed with this communication, again described as "Annexure A" (Pages 9-10).

6. Another notice was issued independently, on 4-7-1979 calling upon the appellants to show cause as to why another amount determined at Rs. 1,97,978.12P be not recovered from them, by way of differential duty, covering the period October 1978 to March 1979. The first demand for the period May 1978 to September 1978 by means of notice dated 22-1-1979, as already indicated, was raised on the ground that although the goods were classifiable under Item 18B(ii), they had been cleared after paying duty under T.I. 68 and to that extent, there had been short levy amounting to Rs. 91,627.30. But subsequently, the Department conveyed the view that the double yarn with constituents polyester; acrylic at the ratio of 50:50 was assessable under T.I. 18E, and working on that basis, the differential duty amount was determined to be Rs. 97,878.16. For the subsequent period also, by means of notice dated 4-7-1979 it was conveyed to the appellants that clearances under T.I. 68 were tantamount to short levy and that some of the goods were assessable to excise duty under T.I. 18B(ii) and some under 18E, depending upon the composition of the doubled yarn, or the percentage of the constituent yarns.

7. The appellants resisted both the demands, (rather three), by contending that they had bought duty paid yarn, and stored the same in the premises after obtaining permission as contemplated by Rule 51A of the Central Excise Rules, 1944 (hereinafter referred to as the R