Doubling or twisting single ply cotton yarn is not manufacture, and no duty arises under the excise rules.

Doubling, twisting or multifolding single ply cotton yarn of the same type does not amount to manufacture because no new commodity comes into existence. On that basis, removal of the yarn for such processing did not attract duty under the Explanation to Rules 9 and 49 of the Central Excise Rules, 1944, which applies only where duty-paid goods are consumed in the manufacture of another commodity. The text treats single ply yarn and the processed yarn as continuing to be the same commodity for excise purposes, so the demand could not be sustained.

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Issues: (i) Whether doubling, twisting or multifolding of single ply cotton yarn amounts to manufacture. (ii) Whether removal of single ply yarn for such processing attracts duty under the Explanation to Rules 9 and 49 of the Central Excise Rules, 1944.

Issue (i): Whether doubling, twisting or multifolding of single ply cotton yarn amounts to manufacture.

Analysis: The process involved only one variety of yarn of the same type. The earlier decision relied upon by the Department was distinguishable because it dealt with doubling and twisting of two distinct types of yarn falling under different tariff items. The Tribunal followed the line of authority holding that single yarn and doubled or multifold yarn remain varieties of the same commodity and that no new product comes into existence merely because the yarn is doubled or twisted.

Conclusion: Doubling, twisting or multifolding of single ply cotton yarn does not amount to manufacture.

Issue (ii): Whether removal of single ply yarn for such processing attracts duty under the Explanation to Rules 9 and 49 of the Central Excise Rules, 1944.

Analysis: Since the processing did not result in manufacture of another commodity, the single ply yarn was not treated as having been utilised in the manufacture of a different product. The Explanation to Rules 9 and 49, including the retrospective amendment, applied only where duty-paid goods are consumed in the manufacture of another commodity. On the facts, the same yarn remained yarn throughout and the tariff did not draw a relevant distinction between the two varieties.

Conclusion: Duty was not chargeable at the single ply stage under the Explanation to Rules 9 and 49.

Final Conclusion: The demand could not be sustained, and the appeals failed.

Ratio Decidendi: Where doubling or multifolding of yarn of the same type does not bring into existence a new commodity, the process is not manufacture and the original yarn is not treated as utilised in the manufacture of another commodity for the purpose of Rules 9 and 49.

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