TaxTMI 
TaxTMI 
1988 (11) TMI 217
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....refore, taken up together for hearing and are disposed of by this common order. 2. The respondents were engaged inter alia in the business of texturising synthetic yarn. For this purpose, they were receiving "partially oriented yarn" ("POY", for short) from other manufacturers and subjecting such yarn to the process of draw-texturising. In the process, the denierage of the POY got reduced. The resultant texturised yarn was being cleared from the respondents' factories on payment of excise duty at Rs. 5/- per kg in terms of Central Excise Notification No. 55/78 dated 1-3-1978. The excise authorities, however, considered that the concessional rate was not applicable to the goods manufactured and cleared by the respondents since the POY was....
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.... were understood differently in trade. Whereas POY had a short shelf-life and could not be directly converted into texturised yarn without simultaneously being drawn for reduction of its denierage, FOY had a long life and could be directly converted into texturised yarn. She contended that though the respondents used POY for conversion into texturised yarn, it was not "base yarn" for the purpose of Notification No. 55/78 nor was it texturised yarn. According to her, only FOY would be "base yarn" for this purpose. As regards the factual averments in the affidavit filed by Shri M.N. Desai, Weaving Superintendent of respondent No. 1, Smt. Zutshi stated that they were correct. In conclusion, Smt. Zutshi submitted that the respondents were liabl....
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....pun, e.g. polyester, nylon, polypropylene etc. These polymers are normally available in the form of chips. These chips are melted in the spinning head by hot grid and the polymer melt is then passed through spinnerettes to get filaments. The filaments are solidified with the help of chilled air and are wound at a speed of around 2500 to 4000 mts/min on a suitable package. This POY has a residual draw ratio of around 1 to 1.8 and its shelf-life is 3 to 6 months. The POY is subjected to drawing and stretching processes in a draw-texturising machine in which the drawing and texturising operation is carried out simultaneously. In the drawing operation, the POY is stretched by 2 to 3 times its original length and the resultant denier of the draw....
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....d Eighty-five rupees per kilogram. (b) textured Ninety-five rupees per kilogram. Explanation: "Textured yarn" means yarn that has been processed to introduce crimps, coils, loops or curls along the length of the filaments and shall include bulked yarn and stretch yarn". There is no dispute that the subject goods, namely, textured yarn cleared by the two respondents fell under Item No. 18 II(i)(b). 8. While the tariff sets out the description and the rate of duty appearing in the First Schedule to the Central Excises and Salt Act, the Central Government, by Notification No. 55/78-CE dated 1-3-78, issued under Central Excise Rule 8(1), has exempted textured yarn as described in the table to the notification and fal....
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.... crimps, coils, loops or curls along the length of the filaments. Nor is it the department's case that POY is bulked yarn or stretch yarn. It may thus be seen that the POY does not conform to the definition of "textured yarn" contained in the explanation to Item No. 18 II of the Central Excise Tariff Schedule and is not, therefore, textured yarn. If this be so, then it follows that POY (in the present case there is no dispute that it is non-cellulosic) falls under Item No. 18 II (i) (a) as "other than textured" non-cellulosic man-made filament yarn. 11. Now, turning to Notification No. 55/78 dated 1-3-1978, it may be seen that base yarn has been defined as yarn falling under Item No. 18 II(i)(a) of the Central Excise Tariff Schedule from....