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 

AI Summary

Excise Duty May Apply to Captively Used Synthetic Multi-Filament Yarn in Manufacturing Process Without Paper Cone Packaging A manufacturer of narrow woven fabric, exempt from Central Excise Tariff, produces an intermediate product, synthetic multi-filament yarn, during the manufacturing process. This yarn is not sold but used in the production of narrow woven tape. The query concerns whether excise duty applies to this yarn when used captively without paper cone packaging. The response suggests that excise duty may be payable on the intermediate product, especially if the final product is exempt from duty or subject to a reduced rate without Cenvat Credit. The short life of the product does not exempt it from excise duty.