2017 (3) TMI 364

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....r chapter 52 and 55 of the Schedule to the Central Excise Tariff Act, 1985. During the preventive visit to the unit on 23.2.2005, Shri N.k.Maheshwari, President (Works) of the appellant stated that the appellant is engaged in the manufacture of cotton yarn and cotton blended yarn falling under chapter 52 and 55 of the Central Excise Tariff Act. He further submits that basically there were two units but as per records it was two parts of the unit since the permission for separate EOU stands as applied for. In one part of the unit, they were manufacturing 100% raw white cotton yarn falling under chapter 52 of the Central Excise Tariff Act and in second part they were manufacturing 100% dyed cotton falling under chapter 52 of the Central Excis....

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....der chapter 52 and (b) from the manufacturing of cotton blended under chapter 55. It was the allegation of the Revenue that the above two kinds of waste generated in separate manufacturing process are required to be cleared separately. As waste of cotton yarn does not attract duty and waste of cotton blended yarn attract duty and is classified under chapter 5505. It was alleged that the appellant has admitted that both processes carried out separately and machines are cleared had changed on every lot. In view of this, the waste generated in two processes are separate and waste generated during the manufacturing blended yarn under chapter 55 was to be cleared on payment of duty which the appellant failed to do so. In these sets of facts, var....

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....l remain of cotton only. In that circumstance, the appellant is not liable to pay duty. He also relied on the decision of the Tribunal in the case of Indian Rayon & Industries Ltd. vs. CCE, Calcutta-2001 (138) ELT 773 (Tri.-Kol.) which has been affirmed by the Apex Court reported in 2012 (284) ELT 125 (SC). 5. On the other hand, learned AR opposed the contention of the learned Counsel and submitted that in the second part of the unit, it is admitted fact that the appellant is manufacturing 100% cotton dyed yarn and cotton blended yarn on lot wise basis and it is also admitted fact that clearing of the machine is done on the lot change. Therefore, whenever the appellant is manufacturing cotton blended yarn, waste is arising therefrom is to ....

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....re is required and for manufacturing of 1 kg of combed cotton/melange yarn, 1.40 kg of cotton is required which produced 2 kg of cotton blended yarn. The waste arising therefrom is 400 gms of cotton waste and 60 gms of acrylic waste. In that circumstance also, the cotton is predominating over the acrylic fibre waste as cotton 400 gms and acrylic waste is 50 gms as per section note 2 of the section 9 of the Central Excise Tariff Act which reads as under: 2.(A) Goods classifiable in Chapters 50 to 55 or in heading 5809 or 5902 of a mixture of two or more textile materials are to be classified as if consisting wholly of that one textile material which predominates by weight over any other single textile material. 8. Admittedly in this case,....