excise of intermediate products

[Guest]

My friend is a manufacturer of Narrow woven fabric (CETH 5806) from Plastic granules/scrap. Narrow woven fabric is exempted under Central Excise Tariff.  During the manufacture process, an intermediate product namely synthetic multi-filament yarn(CETH 5402) is obtained.We use this yarn wound on bobbin  in the manufacture of narrow woven tape.  He does not sell this yarn. This yarn is a  complete product in itself except coning. This yarn is available in the market wound on paper cone( packing ) .Without paper cone yarn can not be sold.However this yarn has a life of few months and a complete product. Some of other units have sold this yarn in the market. If this yarn is to be sold in the market then, then a paper cone (packing) is to be  used and if used captively then no paper cone is used instead a bobbin is used on needle looms to use yarn in the manufacture of narrow woven fabric. My question is whether we will have to pay excise duty on synthetic filament yarn captive consumed without use of paper cone(packing material) captively used in the manufacture of narrow woven tape and we will have to seek excise registration. Please tell some relevant judgements/circulars. Please reply quickly as excise officers are pressing hard.     

Thanks and regards ,

Harish 

[Mukesh Kumar]

Though it require a detailed stuty but as per my primary view it is to be checked wether final product is exempted from duty or reduced rate of duty is available without Cenvat Credit. In both the situtations, excise duty is payable on intermediate product.

Further, short life of product is no ground to say that excise duty shall not be levied.

AI Summary

Excise duty on captive intermediate goods: levy may apply where final product is exempt or reduced without input credit. Excise duty may be chargeable on an intermediate product when the final product is exempt or subject to a reduced rate without entitlement to Cenvat Credit; in such situations duty on the intermediate is payable notwithstanding captive consumption, and the short commercial life or lack of market packaging does not avoid the levy.