2019 (2) TMI 1237 - AT - Central Excise

Tribunal remands Central Excise duty case on yarn for Narrow Woven Fabrics, stresses verification

M/s. Krishna Multifilaments Product Versus Commissioner of Central Excise & ST, Rajkot

The Tribunal remanded a case involving the demand for Central Excise duty on yarn used for Narrow Woven Fabrics. The appellant claimed exemption under SSI ... Demand of Central Excise duty - yarn manufactured within the factory and consumed for manufacture of Narrow Woven Fabrics - Captive consumption - benefit of SSI Notification No. 8/2003-CE dated 01.03.2003 - Held that:- There is contradiction in the claim that the appellant. They have stated that they did not have twisting machine. In the statement of Shri Jitendra Kumar P. Mansuriya, Partner of the appellant, it has been stated that they did not have twisting machine but the appeal memoranda suggests that they have the machine. The facts therefore needs verification. It is obvious that Narrow Woven Fabrics cannot be manufactured using unstable yarn which is not twisted. The appellant in their appeal memoranda also have themselves stated that unstable yarn cannot be used for multifilament and Narrow Woven Fabrics is produced by the process of weaving - The law is very clear, if the yarn produced at the intermediate stage is twisted /texturised before use for weaving the same is liable to Central Excise duty. However, if twisted/terturised yarn does not come into existence before weaving, it may not be taxable - the facts needs verification. Appeal allowed by way of remand. Issues Involved:Demand of Central Excise duty on yarn manufactured and consumed for Narrow Woven Fabrics; Claim of exemption under SSI Notification; Marketability of multifilament yarn; Verification of twisting process; Contradictions in appellant's claims; Remand for further verification.Analysis:The appeal addressed the demand for Central Excise duty on yarn manufactured and consumed for Narrow Woven Fabrics, with the appellant claiming exemption under SSI Notification No. 8/2003-CE. The appellant argued that the intermediate product, multifilament yarn, was not a marketable commodity, thus Central Excise duty should not apply. They presented certificates from a Chartered Engineer and the manufacturer of the yarn twister machine to support their claim that the yarn was not twisted and lacked marketability due to the absence of coning oil essential for twisting. The appellant also referred to relevant case laws and a Board Circular to strengthen their argument regarding the non-marketability of the yarn.The Tribunal carefully considered the submissions and highlighted a contradiction in the appellant's claims regarding the presence of a twisting machine. It was observed that the stability and marketability of the yarn were crucial for its use in manufacturing Narrow Woven Fabrics. The Tribunal emphasized that if the yarn was twisted or texturized before weaving, it would be subject to Central Excise duty. However, if the twisting did not occur before weaving, the yarn might not be taxable. The Tribunal noted the need for verification of facts, especially concerning the twisting process and the availability of certificates that were not presented before the lower authorities.In light of the contradictions and the need for further verification, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority. The decision aimed to ensure a thorough examination of the twisting process, the marketability of the yarn, and the presence of necessary certificates before reaching a final determination on the applicability of Central Excise duty in this case.Overall, the judgment focused on the intricate details of the manufacturing process, marketability of the yarn, and the specific requirements for Central Excise duty, emphasizing the importance of clarity and verification in resolving the issues raised by the appellant.