Excise duty on single yarn arises at manufacture; doubled or multifolded yarn can still qualify for exemption relief.

Central excise duty on yarn was held payable when single ply yarn came into existence as an excisable product, and captive use for doubling or multifolding did not postpone that liability. Applying the principle of deemed removal under Rule 9, the Tribunal treated duty as attaching at the manufacture stage of the single yarn. The notification granting nil rate to doubled or multifolded yarn made from yarn on which appropriate duty had already been paid was held available where duty had been discharged on the single yarn. The resulting effect was that duty arose at the single yarn stage, while the doubled or multifolded yarn qualified for the exemption benefit.

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Issues: Whether central excise duty on yarn was payable at the single yarn stage or only after doubling or multifolding, and whether the exemption under Notification No. 26/94-C.E., as amended, was available to the doubled or multifolded yarn.

Analysis: The Tribunal held that single ply yarn comes into existence as an excisable item on manufacture, and the fact that it is further used captively for doubling or multifolding does not defer the duty liability. Relying on the principle of deemed removal under Rule 9, the Tribunal concluded that duty attaches at the stage when single ply yarn is manufactured. It further held that the notification granting nil rate of duty to doubled or multifolded yarn manufactured out of yarn on which appropriate duty has already been paid applied in the appellants' case because duty had been discharged on the single yarn.

Conclusion: Duty was payable at the single yarn stage, and the appellants were entitled to the notification benefit for the resultant doubled or multifolded yarn.

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