2003 (6) TMI 354

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....c., before it was captively used for manufacture of fabrics. They were also receiving yarn from other parties for carrying out such above processes. After processing, they cleared the yarn without payment of duty. They recovered job charges for the same, from the various parties. During the period March, 1994 to May, 1994, they had cleared cotton yarn after carrying out the process of dyeing and bleaching which they claimed to be exempted under Notification 46/86, dated 10-2-1986. They were issued six show cause notices for the period March, 1994 to March, 1995 for recovery of duty. The six show cause notices were kept pending die demanding the duty were thereafter taken up for hearing by the Assistant Commissioner. The appellants had prefe....

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....not paid duty on the said yarn after process like bleaching, dyeing, etc., demands for differential duty were issued for the period from March, 94 to March, 95 (up to 15-3-95). During this period, duty was discharged on ad valorem basis (not specific as used to be prior to March, 94 paid at spindle stage on weight of yarn before sizing). By virtue of provisions of Rules 9 and 49 of CER, 1944, the clearance of yarn takes place in the form in which it is cleared and duty is payable at the time of clearance. Yarn cleared for carrying out the processing of bleaching, dyeing, etc., is also treated as clearance for captive consumption for manufacture of processed yarn. The yarn, in the instant case was subjected to the processes viz. bleaching, d....

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....nts referred above are not applicable in the instant case as the issue involved and manufacturing processes dealt with in those cases are not identical with the case under consideration. After the processes bleaching, dyeing are carried out, a different commodity that is processed yarn emerges which is distinct from 'yarn' and has a different name, character and use and is marketable. Thus, independently all the processes become process of manufacture even prior to 16-3-95 when such provisions were made explicit. This view is further fortified after careful scrutiny of Notification No. 46/86, dated 10-2-86 as amended which granted exemption to processed yarn (dyed/bleached) manufacturer out of duty paid yarn for independent processor, me....