1998 (9) TMI 190

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....ise Valuation Rules, 1975 [Rule 6(b)(ii)] popularly known as `costing method' and then double-fold/multi-fold (d.f./m.f. - hereafter) that yarn in their own factory and clear the same without payment of duty under Rule 173H of Central Excise Rules, 1944 as duty on yarn at single stage has already been paid by them. 2. Department has issued a show cause notice on the value at which d.f. /m.f. yarn has been sold by the manufacturer-appellants herein. Contention of the Revenue is that duty is chargeable on the form and on value of those goods in which those are removed from the factory. Since the removal of goods (i.e. yarn) form the factory has been made in the form of d.f./m.f. yarn, the value would be determinable under Section 41(a....

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....view of the fact that an exisable item comes into existence with the manufacture of a single ply yarn. It becomes liable to pay excise duty at that stage. The respondent cannot be allowed to contend that the levy of excise duty is postponed to a point of time when the yarn is removed after doubling or multifolding. The liability to pay excise duty arises at the first stage itself, namely, at the time of manufacture of single ply yarn. This being so the demand raised by the Assistant Collector was not invalid." He further submits that the foregoing observations are fully applicable to the facts and circumstances of this case which are similar to those of Banswara Syntex considered by the Apex Court in its above judgment. 4. Apart ....

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....m.f. of yarn was not a process of manufacture of yarn. Therefore, once the duty had been discharged at single yarn stage, as rightly done, Revenue has no basis to demand duty again on the same commodity again. Supreme Court has clearly held in para 8 of Banswara Syntex, (relevant extracts already set out above) that "doubling or multifolding of the same yarn does not bring into existence a new product and no duty is leviable at that stage." 5. He, therefore, prays for allowing the appeal. 6. Opposing the contention, learned SDR has reiterated the findings of the Commissioner of Central Excise in the impugned order. He submits yarn remains the same yarn at m.f./d.f. stage. It is in that form that yarn is being removed from th....