1985 (1) TMI 56

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....e any yarn. According to them base yarn is either purchased by them which is then processed to introduce crimps, coils, loops or curls or at times base yarn is sent to them for such processing. The case of the petitioners is that they do not undertake any manufacturing activity which can subject them to the levy of excise duty. 3. The entry under which excise duty is sought to be levied is Entry 18. The relevant Entry 18-11 reads as follows : - "Item No. Description of Goods Rate of Duty     Basic  Special Excise 18. II. Man-made filament yarns :       (i) Non-cellulosic -        (a) Other than textured Eighty-five rupees per kilogram.....

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....ellulosic, cellulosic and metallized. It is non-cellulosic yarn which can be exturised. The said Entry 18 provides for a lower duty on untextured yarn. The duty is levied on the product. The product is textured yarn. The explanation to the said Entry exhaustively defines what textured yarn means. According to the explanation "textured yarn" means yarn which has been processed to introduce crimps, coils, loops or curls etc. The explanation, therefore, postulates that the processor has to obtain yarn which is then subjected to the said process of texturising. The entry does not indicate that it is the manufacturer of yarn alone who could be the processor. Ordinarily it may be said that processing of yarn may not tantamount to a manufacturing ....

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....ause that would mean that the levy of duty of ninety-five rupees per kilogram would be in addition to the levy which has already been made on the base yarn and but for the Notification of the Central Government there would have been no exemption of the duty paid on the base yarn. In our opinion, there is no merit in this contention. The Government was conscious of the fact that if an exemption notification is not issued, a yarn may be subjected to excise duty twice over. Therefore, an exemption notification was issued which provided that if base yarn had been subjected to duty then that amount of duty will be deducted from the duty which would be levied on the processer. This is a normal way in which double taxation is avoided. It is to be ....