TaxTMI 
TaxTMI 
2009 (9) TMI 327
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.... of the Commissioner (Appeals). 1.3 Both the appeals involve common issues concerning the same party and therefore, they are being disposed of by this common order. 2. Heard the learned Advocate for the party and the learned DR for the department. 3.1 The relevant facts, in brief, are that the assessee is a manufacturer of cotton yarn falling under Chapter sub-heading 5205 00 and they are also manufacturing sewing thread falling under Heading 5204. The assessee is clearing part of the cotton yarn manufactured by them as such on payment of duty; they are also using part of the yarn in their own factory for manufacture of sewing thread. It is not in dispute that the sewing thread manufactured by the assessee is eligible for SSI exemp....
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.... from Rs.6,38,329/- to Rs.30,000/- under Section 11AC and Rs.10,000/- from Rs.1 lakh under Rule 25. 4. Learned Advocate for the assessee made the following submissions:- (i) They have submitted details of manufacture of yarn as well as sewing thread and also furnished the process of manufacture of sewing thread starting from cotton. They have filed classification list in respect of cotton yarn and for sewing thread and in respect of the later claimed the exemption under Notification No. 8/2002. (ii) They were under the bona fide belief that inasmuch as no duty was payable on sewing thread, the cotton yarn used for manufacture of sewing thread was also not liable for duty. However, on being pointed out by the officers, who visited t....
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....ous stages of process continues to be yarn in terms of Chapter Note 1 of Chapter 52 of the Central Excise Tariff Act, 1985 which provides that "in relation to product of Chapter Heading No. 52.04, 52.05 and 52.06 includes the process of dyeing, printing, bleaching, mercerizing, twisting, texturising, doubling, multiple-folding, cabling or any other process or any one or more of these processes, or the conversion of any form of the said products into another form of such products shall amount to manufacture". In view of the above, he submits that duty should be paid at the stage as determined by the original authority and as upheld by the Commissioner (Appeals). He also submits that the assessee has not accounted the yarn which was issued to....
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....ies for cotton yarn and cotton sewing thread. It cannot be the case that cotton yarn can reach the stage of cotton sewing thread without any process being undertaken. The assessee is apparently also clearing cotton yarn on payment of duty at stages prior to doubling and waxing. The assessee claims that the clearance of single ply yarn should be treated as clearance for captive consumption for the manufacture of sewing thread and at that stage duty should be held liable and the rest of the processes should be treated as activities relatable to manufacture of sewing thread. The processes involved in conversion of the yarn to sewing thread require to be appreciated taking into account the definition of the term manufacture as applicable to yar....
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....xcise, Bombay 1989 (44) E.L.T. 598 (S.C.) held "Excise is a duty on manufacture of production. But the realization of the duty may be postponed for administrative convenience to the date of removal of goods from the factory. We are of the opinion that even though the taxable event is the manufacture or the production of an excisable article, the duty can be levied and collected at a later date for administrative convenience". The said principle cannot be applied to the facts of the case in these appeals. 5. In the case of Banswara Syntex (supra), a three Judge Bench of this Court dealing with identical issue as is involved in this appeal held: "A single ply yarn is first manufactured and thereafter it is doubled or multifolded depending ....
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....d period of limitation, it is observed that the assessee no doubt filed classification list regarding manufacture of yarn and sewing thread. They have also claimed exemption in respect of sewing thread under Notification No. 8/2002. However, it is not disputed that the assessee has not accounted for the entire quantity of yarn. In other words, they have not accounted the yarn issued for the captive consumption for the manufacture of sewing thread in their production/clearance accounts and that they have not specifically claimed exemption for clearance of the yarn so used in sewing thread. They have also not filed any returns relating to such production and clearances of yarn so used for sewing thread. We have not been shown that the Departm....