Excise duty on single ply yarn arises at manufacture, even when later converted into double ply or multi-fold yarn in a captive process.

Excise duty on single ply yarn arose at the stage of its manufacture, because the subsequent doubling or multi-folding in a continuous captive process did not create a new product for duty purposes. Captive consumption and the absence of immediate clearance did not defer liability, as the taxable event remained the manufacture of the single ply yarn itself. Prior decisions on the same issue were treated as controlling, and the later authority cited by the assessee was found consistent with that settled position. The appeals therefore failed, and duty liability at the first manufacturing stage was upheld.

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Issues: Whether central excise duty on single ply yarn was leviable at the stage of its manufacture, or only when the yarn was converted into double ply or multi-fold yarn and cleared from the factory.

Analysis: The dispute turned on the stage at which the excisable event occurred. The Court held that the manufacture of single ply yarn itself attracted duty, and that its further doubling or multi-folding in a continuous process did not bring into existence a new product for duty purposes. It further held that the fact that the yarn was captively consumed and not cleared as such did not alter the duty liability. The earlier decisions governing the same issue were treated as controlling, and the later decision relied on by the assessee was found not to conflict with that settled position.

Conclusion: Duty was payable on the manufacture of single ply yarn, and not only at the stage when the finished double ply or multi-fold yarn was cleared.

Final Conclusion: The appeals failed because the liability to excise duty arose at the first manufacturing stage, and the tribunal's view was sustained.

Ratio Decidendi: Where a single ply yarn is manufactured and then further processed in a continuous captive process without emergence of a new product, excise duty is attracted at the stage of manufacture of the single ply yarn, irrespective of subsequent conversion before removal.

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