Doubling yarn is not manufacture; excise duty applies only at the single yarn stage, not on later processing.

Single ply yarn is the excisable commodity, and duty attaches at the stage of its manufacture. Subsequent doubling or multifolding of that same yarn does not create a new product and does not amount to manufacture, so no fresh excise duty arises at the later stage. The fact that duty-paid yarn is further processed, or that an exemption notification refers to doubled yarn, does not change the levy test, which remains manufacture and marketability. The issue is therefore resolved by treating single yarn and doubled or multifolded yarn as not being different excisable goods for the purpose of later-stage levy.

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Issues: Whether single yarn and doubled or multifolded yarn are different excisable goods attracting separate excise duty, and whether doubling or multifolding single yarn amounts to manufacture.

Analysis: The reference was answered by applying settled Supreme Court authority that single ply yarn is the excisable product and duty attaches at the stage of its manufacture. Doubling or multifolding the same yarn does not create a new product and does not amount to manufacture. The fact that duty-paid yarn is later subjected to further processing, or that an exemption notification covers doubled yarn, does not alter the position that excisability depends on the test of manufacture and marketability, not on the mere mention of the item in an exemption entry.

Conclusion: Single yarn and doubled or multifolded yarn are not treated as different goods for the purpose of levy at the later stage, and no fresh excise duty arises on doubling or multifolding. The reference was answered against the Revenue and in favour of the assessee.

Ratio Decidendi: Where single ply yarn is already an excisable commodity, subsequent doubling or multifolding of that same yarn does not amount to manufacture of a new excisable product and duty is chargeable at the single yarn stage alone.

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