2025 (11) TMI 254 - SC - Central Excise

Processing purchased PET chips into textured yarn is not 'manufacture', so concessional 8% excise duty denied

The SC held that the process of purchasing filament yarn as such or organic polymers (PET chips) and processing them into textured yarn does not amount to ... Process amounting to manufacture or not - purchase of filament yarn as such or organic polymers (PET Chips) and processing it to make textured yarn - entitlement to benefit of a concessional excise duty at 8% - HELD THAT:- The appellants herein are purchasing filament yarn as such or organic polymers (PET Chips) and processing it to make “textured yarn”. Consequently, the process involved in the instant case does not amount to manufacture of “filament yarn.” In the circumstances, the appellants are not entitled to the benefit of a concessional excise duty at 8%. There are no reason to interfere with the orders passed by the appellate tribunal - appeal dismissed. Notification No. 29/2004-CE (09.07.2004) as amended, provides exemption language for 'All filament yarns procured from outside and subjected to any process by a manufacturer who does not have the facilities in his factory (including plant and equipment) for the manufacture of filament yarns of Chapter 54.' The Explanation defines 'manufacture of yarns' as manufacture of filaments of organic polymers produced by: (a) polymerization of organic monomers... or (b) chemical transformation of natural organic polymers.... The appellants purchased filament yarn or PET chips and processed them into 'textured yarn.' The Court held that this processing 'does not amount to manufacture of 'filament yarn.'' On that basis the appellants are 'not entitled to the benefit of a concessional excise duty at 8%.' The appellate tribunal's orders, which followed the same reasoning, were upheld and the appeals dismissed; related appeals following that decision were likewise dismissed. Pending applications were disposed of.