Proforma credit on doubled yarn failed once the process was held not to amount to manufacture and duty was not payable.

The article explains that proforma credit under Rule 56A was claimed only in relation to doubled or multifolded yarn cleared during the relevant period. Since the Supreme Court had already held that doubling or multifolding yarn does not amount to manufacture, the yarn was not dutiable. On that basis, the Revenue's challenge to the credit granted by the first appellate authority had no independent footing and could not survive. The Revenue's objection was rejected and the appeal was dismissed.

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Issues: Whether the Revenue's challenge to the grant of proforma credit under Rule 56A could survive when the process of doubling or multifolding yarn was held not to amount to manufacture and the goods were consequently not dutiable.

Analysis: The claim for proforma credit arose only in relation to the duty position of doubled or multifolded yarn cleared during the disputed period. The Tribunal noted that the Supreme Court had already held that the process of doubling or multifolding yarn did not amount to manufacture, with the result that the goods were not liable to duty. Once that position stood concluded, the Revenue's objection to the credit granted by the first appellate authority no longer had an independent footing.

Conclusion: The Revenue's challenge to the grant of proforma credit did not survive and was rejected; the appeal was dismissed.

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