TaxTMI 
TaxTMI 
1984 (9) TMI 286
X X X X Extracts X X X X
X X X X Extracts X X X X
....rther orientation and texturisation of the P.O.Y., the resultant product being known as 'textured yarn' falling under Tariff Item No. 18-II(i)(b) of the Central Excise Tariff. In November, 1982, the respondents had requested the Assistant Collector of Central Excise for permission to work under Rule 56B procedure, so that, they could send their P.O.Y. to their Unit at Naroda for further orientation and texturisation and clear the texturised yarn from that unit on payment of duty. Or in the alternative to return the texturised yarn to the factory at Patalganga before clearance of the goods on payment of duty. The Assistant Collector of Central Excise granted the necessary permission to the respondents vide his letter dated 6-12-1982. It may be noted that the request for permission to work under Rule 56B procedure was made in accordance with the Trade Notice dated 7-10-1976 issued by the Collector of Central Excise amended from time to time in the prescribed form. Similarly, permission was accorded to the respondents to send their goods, viz., P.O.Y. for orientation and texturisation from Patalganga to Naroda on the conditions set out in the letter dated 6-12-1982 issued by the Assis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the nature of semi-finished goods can be removed for carrying out certain manufacturing process. The partially Oriented yarn is not in the nature of semi-finished goods. Hence your request for grant of permission for removal of the same under Rule 56B of the Central Excise Rules, 1944 cannot be entertained." The Respondents, thereafter, filed an appeal before the Collector (Appeals), Bombay who set aside the decision of the Assistant Collector and held that "P.O.Y. is a raw material for texturisation in the semi-finished state, and the conditions laid down under Rule 56B ibid are squarely applicable to it". 4. In the appeal before the Tribunal, the Additional Collector has stated that P.O.Y. is a fully finished commodity which is brought and sold in the market, and that the respondents had in fact been selling large quantities of P.O.Y. manufactured by them in their Patalganga Unit. No doubt, some quantity especially P.O.Y. of more than 350 deniers is sent to their unit at Naroda at Ahmedabad for texturising. The Addl. Collector has further stated that the two items, viz. P.O.Y. and textured yarn fall under two different sub-items of Item 18 of the C.E.T. Accordingly, both t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....brics only after it is further oriented and texturised. Before the texturising process, it is sold only to Texturing units who have the requisite draw texturising equipment. These are therefore in the nature of semi-finished goods which has to undergo further processing in order to be fit for being consumed by the textile industry. Shri Srikantia added that both the items P.O.Y. and textured yarn fall under the same item viz. 18-II of the Central Excise Tariff under the heading: "Man-Made Filament Yarn Rate of Duty Basic (i) Non-Cellulosic (a) Other than textured ₹ 95/- per kg. (b) textured ₹ 105/- per kg. Explanation. - 'Textured Yarn' means yarn that has been processed to introduce crimps, coils, loops or curis along the length of the filaments and shall include bulked yarn and stretch yarn." The Explanation to the item 18-II is clear and shows that only difference between P.O.Y. and textured yarn is that additional processes to introduce crimps, coils, loops or curis, etc. are required to be performed. It is incorrect to say that Rule 56B would not include such a manufacturing process if it results in the change of description of the goods from one sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowing factors are important in this case. 8. That the Assistant Collector of Central Excise had after due consideration granted permission to the respondents to avail of the procedure under Rule 56B to remove the P.O.Y. manufactured in their unit at Patalganga to their unit at Naroda, Ahmedabad for further orientation and texturisation, since the respondents did not have the requisite machinery and equipment in their unit at Patalganga. 9. That the application for availing the facility under Rule 56B had been made in accordance with the Trade Notice No. 168, dated 7-10-1976 and the respondents complied with all the prescribed condition and executed a Bond for removal of these goods from one unit to the other. It appears that similar permission was also granted at that time to some other manufactures on similar conditions. 10. That the permission granted to the respondents was peremptorily withdrawn without any cogent reasons. The reason given by the Asstt. Collector in his letter dated 11-3-1983 is incorrect and cannot bear any scrutiny. It was wrong on his part to state that there had been any budgetary changes in the matter of classification of P.O.Y and Textur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e incidence of duty on textured deniers would be high. The Tariff structure shows that the rates of duty on P.O.Y. is ₹ 95/- per kg. and textured yarn would be ₹ 105/- per kg. However, in accordance with Exemption Notification No. 49/83-C.E., dated 1-3-1983 and No. 51/83, dated 1-3-1983, the effective rates of duty for P.O.Y. and the Textured yarn have been reduced. In accordance with Notification No. 178/83, dated 1-7-1983 the textured yarn manufactured out of duty paid filament yarn other than textured is fully exempt from basic excise duty. In other words, it is envisaged that textured yarn could be manufactured out of duty paid polyester yarn or non-duty paid polyester yarn and exemption has been provided for such yarn as is made out of duty paid polyester yarn. 13. The Bench observes that the Collector of Central Excise (Appeals) has arrived at a decision on certain assumptions, viz, that the P.O.Y. is a "raw material" subjected to drawing and texturising, He has further stated that P.O.Y. is "semi-finished" goods which needs further processing to achieve/attain marketability form. He has further stated that after draw-texturisation, the denier of P.O.Y. is r....