Doubling cotton yarn was not manufacture of a new commodity; excise duty arose only on clearance of double ply yarn.

Conversion of single ply cotton yarn into double ply cotton yarn was treated as further processing of the same commodity, not manufacture of a new product. The tariff structure and comparable chapter note did not distinguish the two for duty purposes, and no single ply yarn was cleared before doubling. Excise duty therefore arose only when the double ply yarn was cleared, so the intermediate stage was not separately dutiable.

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Issues: Whether conversion of single ply cotton yarn into double ply cotton yarn amounted to manufacture so as to attract duty at the single ply stage, or whether duty was payable only when the double ply yarn was cleared.

Analysis: The process of doubling or multifolding of single ply yarn of the same type was held not to bring into existence a different commodity. The relevant tariff structure and the comparable chapter note did not create a distinction between the two varieties of yarn for this purpose. As the assessee did not clear any single ply yarn and the entire quantity was further processed into double ply yarn before clearance, the intermediate stage did not attract separate duty.

Conclusion: Conversion of single ply cotton yarn into double ply cotton yarn did not amount to manufacture of another commodity, and excise duty was payable only at the double ply yarn stage, in favour of the assessee.

Ratio Decidendi: Where further processing of the same type of yarn does not produce a new commodity and no intermediate clearance of the original yarn takes place, the process does not create a separately dutiable product at the intermediate stage.

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