TaxTMI 
TaxTMI 
1984 (2) TMI 335
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....er staple fibre. Shri S.N. Kabra, Sales Manager and Authorised Representative of the appellants, furnished particulars of their purchases and gave a statement under Section 14 of the Central Excises and Salt Act, 1944 saying that the material purchased by them was in running length and that after manually sorting and straightening the said material they cut it into staple fibre with the help of five power-operated fibre cutting machines installed in their factory. On adjudication of the matter, the Collector held that the so-called crimped uncut waste purchased by the appellants was in fact polyester fibre tow, that tow and staple fibre were commercially two distinct products, that they had carried on manufacture of polyester staple fibre from tow without making any declaration to the Department and without obtaining the requisite Central Excise licence and that they were liable to pay the duty on the staple fibre manufactured by them less the duty already proved to have been paid on the so-called crimped uncut waste. The appellants filed an appeal before the Central Board of Excise & Customs against the Collector's order. The said appeal was transferred by the Board to this Tribun....
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....y the appellants from the said material was sold as sub-standard yarn. (2) Assuming that the material purchased by the appellants was tow, all that they did in relation to that material was simply cutting of running length fibre into short length fibre which did not involve 'manufacture' of a different article of commerce. They relied on the Supreme Court judgment in the case of Commissioner of Sales Tax, U.P., Lucknow v. Harbilas Rai and Sons (Sales Tax Cases Vol. XXI page 18). In this case, the Supreme Court had held that boiling, washing and sorting of pig bristles did not result into manufacture of a new commercial article as pig bristles remained pig bristles only. In the same way, there was no manufacture involved from fibre to fibre in the case of the appellants. (3) Liability to pay duty at the correct rate was that of the manufacturer of the material purchased by the appellants; the said liability could not be fastened on the buyers of the material (reliance on the Delhi High Court judgment in Sulekh Ram and Sons v. U.O.I. and Others reported at 1978 E.L.T. 525). [While on this point, it may be stated that on 13-9-1983 the appellants named M/s. Swadeshi Polytex Ltd., Gha....
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....hat it was not entitled to pay duty at the rate applicable to waste under this notification as the notification specifically applied to short lengths only. (2) Tow was a distinct commercial product different from staple fibre. Tow was a stage earlier than staple fibre. Tow as such could not be used for spinning of yarn; it had to be converted into staple fibre to facilitate such spinning. He relied on the earlier orders of this Tribunal wherein processes like doubling of yarn and powdering of pyrites had been held to be processes of manufacture which brought into existence commercially distinct products. In the same way, cutting of polyester fibre tow into polyester staple fibre was also a process of manufacture. The Sales Tax case of Harbilas Rai and Sons relied on by the appellants could not be applied to central excise matters as the definition of "manufacture" in the Sales Tax law was not pari materia with the central excise definition. The Department's case, in brief, was that really tow was cleared from the factory of M/s. Swadeshi Polytex Ltd., Ghaziabad, but on payment of duty applicable to waste and that since the appellants had manufactured staple fibre by cutting the ru....
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.... doubt result in some jumbling up or tangling of the loose rope like material in running length. But this could be set right by employing some manual labour to sort out and straighten the fibre before cutting it. The evidence on record shows that this is what happened in the case of the material purchased by the appellants. No real waste resulted when they used this material except uneven end cuttings which too were used by them after carding. This proves that their material was of good quality. Further, it was indisputably in running length. It has, therefore, to be held that the material was not waste as defined in Notification No. 53/72-C.E. The material substantially conformed to the definition of tow although in the documents it was described as crimped uncut waste and presumably paid duty as applicable to waste. 9. The next question which we have to consider is whether there was any liability on the part of the appellants to obtain a licence and pay the differential duty. Liability for the duty could arise only under Item 18 of the Central Excise Tariff which related to rayon and synthetic fibres and yarn. Within this item, the relevant sub-item contained a single entry....