Excise duty on draw twisted yarn: twisting was not manufacture before 16-3-95, so no levy applied for that period.

Twisting duty-paid yarn into draw twisted yarn was not treated as manufacture for excise purposes before 16-3-95, because the tariff then did not specifically classify draw twisted yarn as a separate taxable product. The later introduction of Chapter Heading 5302.49, Chapter Note 3 and Notification No. 36/95-C.E. showed subsequent statutory recognition of twisting as manufacture for that product, but that change did not apply retrospectively. Accordingly, draw twisted yarn was not leviable to duty for the period before 16-3-95, and the view of the Commissioner (Appeals) was affirmed against the assessee.

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Issues: Whether draw twisted yarn was leviable to duty prior to 16-3-95.

Analysis: The tariff position before 16-3-95 did not specifically cover draw twisted yarn as a separate taxable category. The subsequent introduction of Chapter Heading 5302.49, Chapter Note 3, and Notification No. 36/95-C.E. reflected the later statutory recognition of twisting as manufacture for that product. Since the respondent only carried out twisting on duty-paid yarn and that activity was not treated as manufacture before the relevant date, no reason existed to differ from the view taken by the Commissioner (Appeals).

Conclusion: The process of twisting was not manufacture for the purpose of excise duty prior to 16-3-95, and draw twisted yarn was not leviable to duty for that period. The issue is decided against the assessee.

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