M/S RAJASTHAN SPINNING AND WEAVING MILLS LTD., BHILWARA, RAJASTHANversusCOLLECTOR OF CENTRAL EXCISE, JAIPUR, RAJASTHAN

A       MIS RAJASTHAN SPINNING AND WEAYING MILLS LTD.,
                          BHILWARA, RAJASTHAN
                                         v.
       COLLECTOR OF CENTRAL EXCISE, JAIPUR, RAJASTHAN

                                  MAY 9, 1995
B
                    (R.M. SAHA! AND SUHAS C. SEN, JJ.]

          Central Excises and Salt Act, 1944 :

C         First Schedule-Item 18-E-'Polypropylene Spun Yam'-Exemption
    From duty-Notificatioir--Scope and interpretation of-Non-cellulosic spun
    yam consisting of polypropylene fibre and viscose fibre with predominant
    weight of former component-Held not covered by the Notification-Onus is
    on the assessee to establish that the goods produced are governed by exemp-
    tion-Exemption notification should be construed strictly.
D
           The appellant-Company was manufacturing non-cellulosic spun
    yarn consisting of 52% polypropylene fibre and 48% viscose fibre which
    was liable to be classified under Tariff item 18-E of the Fist Schedule to
    the Central Excises and Salt Act, 1944. It claimed benefit of Notification
E   No. 332177 dated 1.12.1977 which provided that 'polypropylene spun yarn'
    falling under item 18-E was exempted from the whole of the excise duty
    leviable thereon. The claim was accepted by the Collector (Appeals) but
    the Customs Excise and Gold (Control) Appellate Tribunal disallowed
    the claim holding that the term 'polypropylene spun yarn' used in the
    notification meant yarn spun out of Polypropylene fibers and the blended
F   yarns manufactured by the Company was not covered by it.

           In appeal to this Court it was contended for the appellant-Company
    that the exemption provided under the Notification was applicable not only
    to pure polypropylene spun yarn but also to blended yarn if the
G   polypropylene component of the yarn was predominant in weight.

          Dismissing the appeal, this Court

          HELD: 1. The notification exempts from duty polypropylene spun
    yarn falling under Tariff Item 18-E, but not blended spun yarn containing
H   polypropylene. The appellant has produced a yarn in which polypropylene
                                        112
               RAJASfHAN SPNG. AND WG. MIUS LTD. v. C.C.E. [SEN, J.[      113

predominates. Because of the predominance of Polypropylene, the goods            A
produced will be classified as 'non- cellulosic spun yarn' under Tariff Item
18-E. The exemption notification, however, is confined to polypropylene
spun yarn only. It does not speak of any blended yarn in which
polypropylene predominates or is equal in weight with any other fibre. No
proof was adduced to show that in commercial parlance such blended yarn
                                                                                 B
was known as polypropylene yarn. Therefore, there is no reason to hold that
the blended yarn produced by the appellant comprising of 52%
polypropylene fibre and 48% viscose fibre will answer the description
'polypropylene spun yarn' as given in the exemption notification. (119-F.-G]

        Collector Central Excise v. Rajasthan Spinning and weaving Mills Ltd.,   C,
[1993] 1 sec 420, referred to•.

      2. It is for ihe assessee to .establish that the goods manufactured by
him come within the ambit of the exemption notification. In case of
exemption from duty,_ there is no question of any liberal construction to
extend the term and the scope of the exemption notification. Such exemp,         D
tion notification must be strictly construed and the assessee should bring
himself squarely within the ambit of the notification. No extended meaning
can be given to the exemption item to enlarge the scope of exemption
granted by the notification. [120-A-B]

        CIVIl,. APPELLATE JURISDICTION: Civil Appeal No. 4154 of                 E
1988.

     From the Judgment and Order dated 1.9.87 of the Customs Excise
and Gold (Control) Appellants Tribunal, New Delhi in A. No. 478/83-
D(Order No. 694/87-D).                                                           F
      D.A. Dave, Bhaskar Pradhan, R.N. Karanjawala, Ms. Manik Karan-
jawala and Ms. Nandini Gore for the Appellant.    .

     A.K. Ganguli, C.B. Babu, N.K. Verma and Dilip Tandon for the
Respondent                                                                       G
        The Judgment of the Court was delivered by

      SE)I!, J. M/s. Rajasthan Spinning and Weaving Mills Limited, Bhil-
wara, has come up in appeal against an order passed by the Customs Excise
and Gold (Control) Appellate Tribunal, New Delhi. The case in the                H
    114                  SUPREME COURT REPORTS [1995] SUPP. l S.C.R.

A Tribunal was heard by a Bench comprising of the Senior Vice-President
    and the Judicial Member. There was difference of opinion between the two
    members on the following question:

            Whether the blended yarn m which polypropylene fibre
            predominates was or was not entitled to benefit under Central
B           Excise Notification No. 322/77-CE dated 1.12.1977?

          The matter was referred to the President of the Tribunal who agreed
    with the view expressed by the Judicial Member that the term
    'Polypropylene spun yarn' used in the Notification No. 332177-CE dated
C   1.12.1977 means yarn spun out of polypropylene fibres and will not in-
    cluded blended yarn manufactured by the appellant-Company comprising
    of 52% propylene and 48% viscose.

           The appellant has contended that the majority view of the Tribunal
    is erroneous having regard to scope of the Notification and also the tariff
D   description of goods in Item 18E of the First Schedule to the Central
    Excises and Salt Act, 1944.

           Before examining this question, the fact of the case may be noted in
    brief. Tariff Item No. 18 at the material point of time stood as under :

E           "18. I.    Man-made fibres, other than mineral fibres :

                       (i) Non-cellulosic

                       (ii) Cellulosic

F               IL     Man-made filament yams :

                        (i) Non-cellulosic -

                        (a) other than textured

G                       (b) textured

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

H                       (ii) Cellulosic
    RAJASIHANSPNG.ANDWG.M!LI.SLTD. ,,C.C.E. [SEN,J.J            115

            (iii) metallized                                           A
III, Cellulosic spun yarn :

     Yarn in which man-made fibre of cellulosic ongm
     predominates in weight and, in or in relation to the manufac-
     ture of which any process is ordinarify carries on with the aid   B
     of power -

    (i)    not containing, or containing not more than one-sixth
           by weight of non-cellulosic fibre calculated on the total
           fibre content,
                                                                       c
    (ii)     containing more than one-sixth by weight of non-eel-
           . lulosic fibre calculated on the total fibre content.

Explanation I.    - "Count" means the size of grey yarn (excluding
                  any sizing material) expressed in English Count.
                                                                       D
Explanation II. - For multiple fold yarn, "count" means the count
                  of the basic single yarn.

Explanation Ill. ~ Where two or more of the following fibres, that
                  is to say,
                                                                       E
            (a) man-made fibre of cellulosic origin;

            (b) cotton;

            (c) wool or acrylic fibre, or both;
                                                                       F
            (d) Silk (including silk nail);

            (e) jute (including Bimlipatam jute or mesta fibre);

            (I) man-made fibre of non-cellulosic origin, other than
            acrylic fibre;                                          G

            (g) flax;

            (h) ramie;

in any yarn aie equal in weight then such one of those fibres, the H
    Utt                   SUPREME COURT REPORTS [1995] SUPP. 1 S.C.R.

A           predominance of which would such yarn fall under that sub-item
            of Item (hereafter in this Explanation referred to as the applicable
            sub-item or Item), among the sub-items and items Nos. 18. III,
            18A, 18B, 18C, 18D, 18E, 18F, I and 18F.II, which, read with the
            relevant notification, if any, for the time being in force issued under
            the Central Excise Rules, 1944, involves the highest amount of duty,
B
            shall be deemed to be predominant in such yarn and accordingly
            such yarn shall be deemed to fall under the applicable sub-item or
            Item, as the case may be,

            IV. Non-cellulosic Wastes, all sorts.
c           18E. Non-cellulosic spun yam.-

                 Spun (discontinuous) yarn which man-made fibres of non-
                 cellulosic origin, other than acrylic fibre, predominate in
                 weight and, in or in relation to the manufacture of which any
D                process is ordinarily carried on with the aid of power.

                 Explanation. - Explanation III under sub-item III of Item No.
                 18 shall so far as may be, apply in relation to this Item as it
                 applies in relation to that Item."

E         During the year 1978-79, the appellant-Company manufacture non-
    cellulosic spun yarn of the following composition :

                        52% Polypropylene fibre

                        48% Viscose fibre
F
    Since non-cellulosic fibre predominated in weight, the yarn manufactured
    by the appellant-company was liable to be classified under T .I. 18E of the
    First Schedule to the Central Excises and Salt Act, 1944. The appellant-
    Company, however, claimed benefit of exemption from payment of the
    whole amount of duty of excise leviable under T .I. 18E on such yarn in
G   view of a notification No. 332177 dated 1.12.1977 which is as under :

            "Notification No. 332n7 dated 1.12.1977: In exercise of the powers
            conferred by sub-rule (1) of rule of the Central Excise Rules, 1944,
            the Central Government hereby exempts Polypropylene spun yarn
H           falling under Item No. 18-E of the First Schedule to the Central
             RAJASI11ANSPNG.ANDWG.MILLSLID. ,,C.C.E. [SEN,J.]            117

        Excises and Salt Act. 1944 (1 of 1944) from the whole of the duty       A
        of excise leviable thereon.

        This notification shall remain force upto inclusive of the 31st
        March, 1979."

       It is of significance that subsequently in 1988 two separate exemption
                                                                                B
notifications were issued (147/18 and 149/80), in respect of polypropylene
and the other in respect of blended yarns.

       We are, however, in this case concerned with the scope and effect of
the notification dated 1.12.1977 set out bereinabove. The contention of the C
appellant which was upheld by the Collector (Appeals) and also the
dissenting member of the Tribunal, was that the exemption granted by a
notification should be construed liberally. The notification did not require
that the exempted yarn must comprise of polypropylene only.
Polypropylene is the predominant fibre in the yarn manufactured by the D
appellant and, therefore, the blended yarn is nothing but Polypropylene
yarn. It is also known as polypropylene yarn in the trade.

       It has further been agreed that there is no dispute that the yarn
manufactured by the appellant fails under T.I.No. 18E. The tariff descrip- E
tion of Item 18E, Non-cefiulosic spun yarn, comprehends 'Spun (discon-
tinuous) yarn which man-made fibre of non-cellulosic origin, other than
acrylic fibre, predominate in weight'. That means polypropylene spun yarn,
which is variety of non-cellulosic spun yarn, will fall under this tariff
description, even if it was blended with some other type of yarn, provided F
that the polypropylene component of the blended yarn was predominant
in weight. The notification dated 1.12.1977 exempted polypropylene spun
yarn falling under Tariff Item No. 18E of the First Schedule to the Central
Excises and Salt Act, 1944 from the duty of excise, which would include
not only pure Polypropylene spun yarn, but also blended yarn, if the
Polypropylene component of the yarn was predominant in weight. It came G
within the mischief of Tariff Item No. 18E and was dutiable as such. The
notification bad the effect of exempting from duty all types of
polypropylene spun yarn which fell within the ambit of T.I. 18E. The
exemption given by the notification could not be restricted only to pure
polyp~opylene spun yarn. The exemption was given to polypropylene spun H
    118                     SUPREME COURT REPORTS [1995] SUPP. 1 S.C.R.

A yarn which means whatever polypropylene spun yarn came within the
    mischief of T.I. 18E.

           It was argued m support of this contention that in the case of
    Collector of Central Excise v. Rajasthan Spinning & Weaving Mills Ltd.,
    [1933] 1 SCC 420, it was held that Item 18 to 18-I from one group of
B
    entries dealing with compo.site yarn of various categories. The tariff items
    proceeded on the assumption that there were various types of composite
    yarns which consisted of different categories of yarns which were spun
    together and the entry specified that the composite yarn should be treated
    as belonging to the categories in which one relevant category predominated
c   in weight. The entry envisaged a comparison between the weight of the
    particular yarn which went into its composition. Explanation III to sub-item
    (iii) of Item 18 proceeded on the assumption that there should be a
    comparison between the various types of yarns that had gone into the
    constitution of the composite fabric.
D
          It was argued that there is no dispute that the appellant-Company
    has manufactured a composite yarn in which both polypropylene and
    viscose yarn have been used, but the character of the yarn produced is
    derived from the particular type of yarn which predominates in weight. In
E   the instant case, since polypropylene yarn constituted 52% and viscose yarn
    48% of the blended yarn, the product must be regarded as polypropylene
    yarn, and but for the notification, would have been taxed as non-cellulosic
    yarn falling under Item 18E.

          We are of the view that the contentions made on behalf of the
F appellant cannot be upheld in the facts of this case and in view of the
    working of the notification dated 1.12.1977. This notification exempts from
    duty polypropylene spun yarn falling under T.I. 18E, but not blended spun
    yarn containing polypropylene. Admittedly the blended yarn manufactured
    by the appellant, containing 52% polypropylene and 48% viscose, will fall
G   within the T.I. 18E, coming within the ambit of the tariff description 'Spun
    (discontinuous) yarn in which man-made fibres of non-cellulosic origin,        •
    other than the acrylic fibre, predominate in weight'. But blended yarn in
    which polypropylene predominates in weight has not been exempted.

H         The exemption is limited only to one type of non-cellulosic yarn out
            RAJAS111AN SPNG. AND WG. MILLS Lill. '· C.C.E. (SEN, J.j   119

of a large variety of yarns which fall under the heading of T.I. 18E, A
'Non-cellulosic spun yarn'. The exemption is limited to polypropylene spun
yarn. Polypropylene fibre blended with other types of fibre will not qualify
for the exemption. If in any blended yarn Polypropylene predominates in
weight, then such yarn will come within the description of goods given in
T .I. 18E, bu'. that will not turn the blended yarn into 'polypropylene spun B
yarn', which has been exempted from duty.

      It has been noted in the order of the Judicial Member of the Tribunal
that no evidence has been given to show that the blended yarn manufac-
tured by the appellant is regarded as polypropylene spun yarn in the
market.
                                                                              c

       Explanation IJI under sub-item IJI of Item No. 18, on which reliance
was placed on behalf of the appellant, does not throw any light on the
dispute raised in this case. This explanation only enumerates various types D
of fibres and deals with cases where two or more of the said fibres in any
yarn are equal in weight. Explanation III introduces a deeming provision
to decide under which sub-items Nos. 18-III, 18A, 18B, 18C, 180, 18E, 18F,
and 18F-II in which such blended yarn will be classified for the purpose of
levying duty. But that will not decide the controversy raised in this case.
Here, we have a case where the appellant has produced a yarn in which E
polypropylene predominates . Because of the predominance of
polypropylene, the goods produced will be classified as 'non-cellulosic spun
yarn' under T.I. 18E. The exemption notification, however, is confined to
polypropylene spun yarn only. It does not speak of any blended yarn in
which polypropylene predominates or is equal in weight with any other F
fibre. It has been noted in the order of the Judicial Member that no proof
was adduced to show that in commercial parlance such blended yarn was
known as polypropylene yarn. Therefore, there is no reason to hold that
the blended yarn produced by the appellant comprising of 52%
polypropylene fibre and 48% viscose fibre will answer the description G
'polypropylene spun yarn' as given in the exemption notification.


       It is also of significance that subsequently in 1980 two separate
notifications were issued granting exemption from duty under T.I. 18E, one
related to polypropylene yarn and the other in respect of blended yarn.    H
    120                  SUPREME COURT REPORTS [1995] SUPP. 1 S.C.R.

A         Lastly, it is for the assesee to establish that the goods manufactured
    by him come within the ambit of the exemption notification. Since it is a
    case of exemption from duty, there is no question of any liberal construc-
    tion to extend the term and the scope of the exemption notification. Such
    exemption notification must be strictly construed and the assessee should
B   bring himself squarely within the ambit of the notification. No extended
    meaning can be given to the exempted item to enlarge the scope of
    exemption granted by the notification.

          The appeal, therefore, fails and is dismissed. There will be no order
    as to costs.
c                                                            Appeal dismissed.
    T.N.A.