Doubling of yarn and manufacture: pre-deposit waived and recovery stayed on a prima facie case.

Doubling of yarn was treated as not amounting to manufacture before the amendment to Note 1 of Chapter 52 because the cited Supreme Court authority indicated that no new product came into existence. The later amendment expressly including doubling of yarn as a deemed manufacturing process showed that the change was needed to bring the activity within the scope of manufacture. On that basis, the assessee established a prima facie case for relief, and the Tribunal waived pre-deposit and stayed recovery of the duty demand.

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Issues: Whether the assessee was entitled to waiver of pre-deposit and stay of recovery on the ground that doubling of yarn did not amount to manufacture prior to the amendment of Note 1 to Chapter 52 of the tariff.

Analysis: The Tribunal noted that the Supreme Court decision cited by the assessee supported the proposition that doubling of yarn did not bring into existence a new product. It also noted that Note 1 to Chapter 52 was later amended to specifically include doubling of yarn as a deemed process of manufacture, which indicated that the amendment was necessary to bring such activity within the scope of manufacture.

Conclusion: The assessee made out a prima facie case for relief, and the duty demand was ordered to be stayed by waiving pre-deposit.

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