Garnetting duty-paid waste to obtain yarn is not manufacture, so the duty demand cannot be sustained.

Garnetting of duty-paid waste to obtain yarn was treated as not amounting to manufacture in the legal sense, so no duty could be sustained on that process. The Tribunal followed an earlier decision holding that garnetting is not a manufacturing process and also noted the Board's circular on the subject. On that basis, it found no reason to uphold the demand, set aside the impugned order, and granted relief to the assessee on the substantive issue.

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Issues: Whether garnetting of duty-paid waste for obtaining yarn after removal of the waste material amounts to manufacture.

Analysis: The issue had already been considered in an earlier Tribunal decision holding that garnetting is not a process of manufacture. A later contrary view was reconsidered on remand in light of the earlier decision and the Board's circular on the process. Following the earlier view and taking note of the circular, the Tribunal found no reason to sustain the demand.

Conclusion: Garnetting of duty-paid waste for obtaining yarn does not amount to manufacture, and the appeal was allowed.

Final Conclusion: The impugned order was set aside and the assessee obtained relief on the sole substantive issue.

Ratio Decidendi: A process of garnetting duty-paid waste to obtain yarn, when it does not bring about manufacture in the legal sense, is not dutiable as manufacture.

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