2004 (3) TMI 465 - AT - Central Excise

Twisted yarn duty dispute: clarity on manufacture, marketability, and exemptions

The case revolved around the levy of duty on twisted filament yarns, penalty imposition, interpretation of a specific notification, and the applicability ... Excisability - Marketability - Twisted filament yarn Issues:1. Levy of duty on twisted filament yarns2. Imposition of penalty3. Interpretation of Notification No. 35/1995-C.E.4. Applicability of exemption on twisted filament yarn subjected to windingLevy of duty on twisted filament yarns:The main issue in this case revolved around whether twisting of filament yarns amounts to manufacture and whether it attracts duty liability. The Commissioner (Appeals) referred to previous orders and noted that twisting of filament yarns falls under the definition of 'manufacture' as per Chapter Note 3. However, the Commissioner also emphasized that duty liability is not attracted unless the twisted yarns are marketable in that form. The appellants argued that twisted yarn is not marketable until it is wound on a support. The Commissioner agreed that the twisted yarn, before winding, is not marketable and is only considered marketable after the winding process. The appellants were exempted from paying duty on the wound twisted filament yarns under specific notifications.Imposition of penalty:Regarding the imposition of a penalty, the appellants argued that there was no justification for the penalty as the dispute was related to the interpretation of a notification rather than short-levy of duty. The Commissioner agreed with this view and set aside the penalty, stating that the circumstances did not warrant its imposition.Interpretation of Notification No. 35/1995-C.E.:The Revenue contended that the twisting of filament yarns was not specifically exempted under the relevant notifications, and the process of winding twisted yarns to make them marketable should not automatically exempt them from duty. They argued that the twisted yarn had not suffered duty before winding, so the process of winding should not be exempted from duty under the notifications.Applicability of exemption on twisted filament yarn subjected to winding:The Tribunal reviewed previous orders and confirmed that the issue of twisted yarns and duty liability had been extensively analyzed. The Tribunal upheld the findings that the twisted yarn did not undergo a change in goods and was entitled to the benefit of the notification regarding duty exemption. As the issue was no longer open to debate, the Revenue's appeal was rejected.In conclusion, the judgment focused on the interpretation of the law regarding the manufacture of twisted filament yarns, duty liability, penalty imposition, and the applicability of specific notifications. The decision provided clarity on the marketability of twisted yarns and the exemption from duty under certain circumstances.