VARELI WEAVES PVT. LTD. AND ANRversusUNION OF INDIA & ORS.

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A                  VAREL! WEAYES 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
    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.

H                                        With
                                          1134
                    VARELIWEAVES PVT. LTD.v. U.0.1.                   1135

         Writ Petition (C) No. 3881 of 1983.                                  A
         (Under Article 32 of the Constitution of India.)

         Soli J. Sorabjee, P.H. Parekh and Ms. Sunita Sharma for the Appel-
lants.
                                                                              B
         Joseph Vellappally, V.K. Verma and N.D.B. Raju for the Respon-
dents.

         The following Order of the Court was delivered :

      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
                                                                                       f
                                                                                   (

    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.

           Learned counsel for the respondents fairly stated that the view taken
B in these judgments was unassailable.

          The circular upon the basis of which the duty was levied having been
    issued -in Delhi, the Delhi High Court had jurisdiction to entertain and try
    the appellants' writ petition.

C          Countervailing duty must be levied on goods in the state in which
    they are when they are imported. Section 3 of the Customs Tariff Act so
    mandates. The PO Y 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 countervailing duty as was provided for in the said claus~ (iv)
D   of the exemption notification. There was no warrant for the levy of counter-
    vailing duty as provided for in the said clause (iii) upon the basis that,
    subsequent to the process of texturising the POY that was imported would
    have the denierage therein stated.

           The Civil Appeal is, therefore, allowed and order of the Delhi High
E Court .is set aside. The Writ Petition filed by the appellants before the
    . Delhi High Court is allowed, The bank guarantee furnished by the appel-
      lants pursuant to the order of this Court dated 2nd May, 1983, shall stand
      discharged.

         Having regard to the order made upon the Civil Appeal, no order
F   upon the Writ Petition is requisite and it is disposed of accordingly.

           No order as to costs.

    T.N.A.                             Appeal allowed and petition disposed of.