Central excise duty on yarn must be computed on unsized spindle-point weight where sized material is not part of clearance.

For yarn falling under Tariff Item 18E, central excise duty is to be assessed on the unsized weight at the spindle point when the yarn is cleared in unsized form for captive consumption. Sizing material is not includible in the assessable weight where the goods are not cleared as sized yarn. The revised position therefore replaces the lower authorities' adoption of sized weight, and duty must be worked out on the weight of yarn as actually cleared at the spindle point.

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Issues: Whether yarn falling under Tariff Item 18E of the Central Excise Tariff was liable to duty on the sized weight adopted by the lower authorities or on the unsized weight as cleared at the spindle point.

Analysis: The petitioners contended that duty had to be levied on the form in which the yarn was cleared at the spindle point, namely in the unsized condition. The Government accepted that where yarn is used for captive consumption and is not cleared in sized form from the spindle point, the sizing material should not be included in the assessable weight for levy of duty. The basis of duty, therefore, was the weight of the unsized yarn at the point of clearance.

Conclusion: Duty was required to be levied on the unsized yarn weight at the spindle point, and not on the sized condition adopted by the lower authorities.

Final Conclusion: The revision application succeeded and the impugned order was set aside, with the levy to be worked out on the unsized yarn basis.

Ratio Decidendi: For yarn cleared for captive consumption, the assessable weight for central excise duty is the unsized weight at the spindle point, and sizing material is not includible where the goods are not cleared in sized form.

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