Yarn in chindies not treated as waste yarn, and duty at the highest rate was upheld under Rule 49A.

Central excise duty was held leviable on the yarn content of small cut pieces of cotton fabric, or chindies, under the special procedure in Rule 49A. The exemption for waste yarn was found inapplicable because the yarn had already been manufactured in running length and did not satisfy the notification condition for waste. Postponement of duty collection until clearance of fabrics did not remove the underlying duty liability on the yarn. As the yarn count in the chindies could not be ascertained, levy at the highest rate was justified and the appeal failed.

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Issues: Whether central excise duty was leviable on the yarn content of small cut pieces of cotton fabrics known as chindies under the special procedure in Rule 49A, and whether the yarn content qualified for exemption as waste yarn.

Analysis: The appeal arose under the special procedure for levy and collection of duty on yarn at the stage of clearance of fabrics. The claimed exemption for waste yarn was held inapplicable because the yarn had already been manufactured in running length and did not answer the condition of the exemption notification. The fact that duty collection was postponed until clearance of fabrics did not alter the underlying duty liability of the yarn. As the count of the yarn content in the chindies could not be ascertained, levy at the highest rate was justified.

Conclusion: The yarn content of chindies was not exempt as waste yarn, and duty at the highest rate was correctly levied; the appeal failed.

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