Mere doubling of duty-paid yarn is not manufacture where no distinct new product emerges for excise classification.

Mere doubling of duty-paid spun yarn, without any transformation into an article with a distinct name, character or use, was treated as a preparatory process for weaving and not as manufacture for excise purposes. The two yarn components remained identifiable and separable, so no new excisable product arose under Tariff Item No. 18-III(ii). As the basic premise for classification and duty failed, the show cause notices issued on that basis could not be sustained and were quashed.

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Issues: Whether the doubling of two duty-paid spun yarns resulted in manufacture of a new excisable product liable to classification and duty under Tariff Item No. 18-III(ii), and whether the show cause notices issued on that basis were maintainable.

Analysis: The doubling process was found to be merely preparatory to weaving and not a process that altered the nature or character of the yarn. The two components remained identifiable and separable, and the process did not bring into existence any article with a distinct name, character or use. The reasoning in the earlier decision concerning doubled yarn was applied, and it was held that no new product emerged from the doubling operation. Since the foundational premise for classification and duty demand failed, the departmental notices could not survive.

Conclusion: The issue was decided in favour of the assessee. Doubling of the yarn did not amount to manufacture of a new excisable product, and the show cause notices were quashed.

Ratio Decidendi: Mere doubling of duty-paid yarn, without transformation into a product having a distinct name, character or use, does not constitute manufacture for excise purposes.

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