Central Excise duty payable at single yarn stage per recent Tribunal ruling. Appellants entitled to nil duty rate for double/multifolded yarn.

The Tribunal held that Central Excise duty is payable at the single yarn stage, following the Supreme Court's decision in C.C.E., Jaipur v. Banswara Syntex Ltd. Goods at an intermediate stage are subject to duty upon manufacture, as per J.K. Spinning & Weaving Mills Ltd. v. Union of India. The appellants, having paid duty on single ply yarn, are entitled to the nil rate of duty for double/multifolded yarn under Notification No. 26/94. The impugned order was set aside, and the appeal by M/s. Auro Spinning Mills was allowed.

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Issues:
- Whether Central Excise duty is payable at single yarn stage or on double/multifold yarn.

Analysis:
The appeal filed by M/s. Auro Spinning Mills raised the issue of determining whether Central Excise duty should be paid at the single yarn stage or at the stage of double/multifold yarn. The appellant contended that they had paid duty at the single yarn stage during a specific period as per Trade Notice No. 70-C.E./94. They argued that duty is payable at the single ply yarn stage only, citing a previous decision by the Appellate Tribunal in the case of Adinath Textiles Ltd. The Department, represented by Mrs. Charul Barnwal, argued that single yarn at the spindle stage is not a marketable commodity but an intermediate product consumed within the factory. She relied on a Tribunal decision in the case of M/s. Oswal Woollen Mills Ltd., stating that duty liability arises at the time of removal of goods from the factory premises, not at the single yarn stage.

The Tribunal considered the arguments from both sides and referred to the Supreme Court's decision in C.C.E., Jaipur v. Banswara Syntex Ltd. The Supreme Court held that an excisable item comes into existence at the single ply yarn stage and is subject to duty upon manufacture. The Court also referred to a previous decision in J.K. Spinning & Weaving Mills Ltd. v. Union of India, emphasizing that goods produced at an intermediate stage and used in the manufacturing process of another commodity are deemed removed and subject to duty. Therefore, the duty is payable at the single yarn stage, as confirmed by the Supreme Court. Additionally, Notification No. 26/94, as amended by Notification No. 90/94, provides nil rate of duty for doubled or multifolded yarn if appropriate excise duty has been paid on the single ply yarn. As the appellants paid duty on single ply yarn, they are entitled to the benefit of the notification. Consequently, the impugned order was set aside, and the appeal was allowed.

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