2002 (1) TMI 649 - AT - Central Excise

Denial of Benefits & Twisting Activity Eligibility under Notifications - Commissioner's Decision

AMBAJI SYNTEX PVT. LTD. Versus COMMISSIONER OF C. EX., SURAT-I

The case involved issues concerning the denial of benefits under Notification 1/93 due to brand name affiliation and the eligibility of twisting activity ... SSI Exemption - Brand name - Yarn - Words and Phrases Issues:1. Denial of benefit under Notification 1/93 to certain units due to brand name affiliation.2. Allegation of twisting activity not amounting to doubling for duty exemption under Notification 35/95.3. Examination of limitation aspect.4. Eligibility of twisting activity as doubling for duty exemption.5. Interpretation of terms 'twisting' and 'doubling' in the context of duty exemption.Issue 1 - Denial of Benefit under Notification 1/93:The case involved M/s. Mahesh Texturisers and M/s. Somani Industries being denied the benefit of Notification 1/93 due to the brand name 'Sumilon' belonging to M/s. Sumit Industries Ltd. being affixed on their product. The Commissioner observed that the cartons bearing the brand name 'Sumilon' led to the denial of benefits under the notification. However, it was argued that the cartons did not belong to the Texturisers but were provided by M/s. Sumit Industries. The matter was remanded for detailed examination of facts regarding the usage of the same cartons for sending texturised yarn for twisting.Issue 2 - Allegation of Twisting Not Amounting to Doubling:Regarding M/s. Ambaji Syntex, the issue was whether the twisting activity amounted to doubling of the yarn for duty exemption under Notification 35/95. The Commissioner held that the twisting process did not qualify as doubling, as per the definition provided. However, after examining authoritative definitions, it was established that twisting and doubling were synonymous terms. The Commissioner's interpretation of 'up twisting' and 'down twisting' was found unclear, and it was concluded that as long as the activity involved twisting, the resultant yarn could be considered doubled, making M/s. Ambaji Syntex eligible for the benefit under the notification.Issue 3 - Examination of Limitation Aspect:The aspect of limitation was not delved into due to the primary focus on determining facts. The parties were advised to address the limitation aspect before the Competent Adjudicator in subsequent proceedings.Issue 4 - Eligibility of Twisting Activity as Doubling:The judgment clarified that the twisting activity, when resulting in twisted yarn, should be considered as doubled yarn for duty exemption eligibility. The Commissioner's error in assuming socks were manufactured directly from the yarn, instead of from fabric, was highlighted. The manufacturing process of socks involves knitting tubular fabrics and subsequent cutting and stitching, supporting the eligibility of M/s. Ambaji Syntex for duty exemption under the notification.Issue 5 - Interpretation of 'Twisting' and 'Doubling':The judgment emphasized the equivalence of terms 'twisting' and 'doubling' based on authoritative definitions. The activities of twisting and doubling yarn were deemed synonymous, leading to the conclusion that as long as twisting occurred, the yarn could be considered doubled for the purpose of duty exemption eligibility.The judgment provided detailed analysis and clarification on each issue raised, ensuring a comprehensive understanding of the legal implications and interpretations involved in the case.