1992 (6) TMI 118 - AT - Central Excise

Duty payable on single ply yarn upheld pre-doubling as part of manufacturing process

The Tribunal upheld the duty payable on single ply yarn before doubling under Rules 9 and 49, considering doubling as part of the manufacturing process. ... Strictures against Department Issues:Interpretation of Rules 9 and 49 for duty on waste arising during yarn manufacturing process, whether duty payable on single ply yarn before doubling, classification of yarn varieties, and the completion of manufacture at the single ply yarn stage.Analysis:The appeal pertains to the duty payable on waste arising during the manufacturing process of yarn falling under specific CET categories. The key issue is whether duty is chargeable on single ply yarn before doubling, invoking Rules 9 and 49. The Tribunal has previously held that doubling constitutes manufacturing, rejecting an over-emphasis on Rule 9's explanation. The duty is technically payable on single ply yarn even before doubling, as per Notification 49/85, implying that doubling results in the manufacture of another commodity.The main contention revolves around whether manufacture is complete at the single ply yarn stage for duty assessment. The respondents argue that single ply yarn, before being used in doubling, is not assessable as it undergoes continuous processing without changing its characteristics. They distinguish their case from previous rulings, emphasizing that doubling the same variety does not create a new type of yarn.The Tribunal has addressed conflicting views within its decisions regarding the classification of yarn varieties and the taxable event in yarn manufacturing. While some orders suggest that different yarn forms are not distinct commodities, others argue that single and multiple yarns differ. The Third Member's recent decision aligns with the view that converting single ply yarn into double or multifold yarn does not result in a new product.In light of the Third Member's agreement with the Judicial Member's order, the Tribunal opts to follow the majority opinion, dismissing the appeal against the Collector (Appeals) decision. The Tribunal criticizes the department's inconsistent relief claims but upholds the Collector (Appeals) order based on the observations and the latest Tribunal ruling.