Captive use of single ply yarn does not defer excise duty; rate applies on the date of manufacture.

Single ply yarn was treated as a manufactured excisable product on which duty arose at the stage of manufacture. Its captively used doubling or multifolding did not amount to manufacture of a new product and did not defer the taxable event. The fact that the yarn was not cleared in single-ply form was immaterial because duty liability accrued when the single ply yarn came into existence. The applicable rate was therefore the rate in force on the date of manufacture, not the date of clearance of the processed yarn. The differential duty demand was upheld against the assessee.

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Issues: Whether single ply yarn captively used for doubling or multifolding was dutiable at the stage of its manufacture, and whether duty was payable at the rate in force on that date or at the rate applicable when the doubled or multifolded yarn was cleared.

Analysis: Single ply yarn was a manufactured product on which duty liability arose at the stage of manufacture. The subsequent doubling or multifolding did not amount to manufacture of a new excisable product and therefore did not postpone the incidence of duty. The fact that the yarn was not cleared in single ply form but was captively used for further processing was immaterial. The duty liability accrued when the single ply yarn came into existence, and the applicable rate was the rate in force on that date. The decisions relied upon by the appellants were held to be inapplicable because they did not decide the same issue.

Conclusion: The duty was payable on the single ply yarn at the rate applicable on the date of its manufacture, and the demand of differential duty was upheld against the assessee.

Ratio Decidendi: Where captively used single yarn is already a manufactured excisable product, subsequent doubling or multifolding does not create a new taxable event or defer the duty liability, and the applicable rate is the rate prevailing at the time of manufacture.

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