TaxTMI 
TaxTMI 
1993 (2) TMI 103
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.... and Salt Act, 1944 and the Rules framed thereunder. Brief facts relating to this case are the following : 3. The petitioner is a public limited company. It is a spinning mill. Besides spinning the petitioner company has got a separate unit for processing the yarn manufactured at the spinning unit. It is the case of the petitioner that the grey yarn manufactured at the spinning unit was taken for processing into mercerised yarn in the processing unit and the processing unit did not have a separate licence. However, in the year 1977, the Deputy Collector, Central Excise felt that the mercerising unit must possess a separate licence, as the process of mercerising would amount to 'manufacture'. Accordingly, the petitioner applied for and ob....
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....pondents directed the cancellation of the licence L. 4 No. 1 /77 (CYP) granted to the petitioner. 4. Aggrieved by that, the present writ petition is filed. Mr. T.R. Rajagopalan, learned counsel appearing for the petitioner submitted that the view taken by the respondents viz., that the processing of grey yarn into mercerised yarn will not amount to 'manufacture' is contrary to the definition of 'manufacture' under the Act and consequently the order cancelling the licence cannot be sustained. He also submitted that the provisions mentioned in the order for cancellation of the licence will not help the respondent to sustain the order. He further submitted that having renewed the licence upto 31-12-1990, the cancellation without any valid r....
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....rovisions let us understand what is meant by mercerising of yarn. The cotton (yarn) manufactured is loaded in batches in the processing unit into the mercerising machine where it is treated with caustic soda solution and washed. The yarn thus mercerised is treated with dilute Hydrochloric acid solution to neutralise the residual alkali and it is further treated in a weak solution, of sodium chemicals. Then the 'mercerised' and 'washed' yarn is centrifuged to remove superfluous water. Thereafter, the yarn thus hydroextracted is spread over bamboos and dried by exposure to sun light in the open drying yarn. The dried yarn is then made into bundles and finally packed into bales. 6. The above process of mercerising of yarn according to the D....
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.... relevant provisions. The definition of 'manufacture' relevant for our purpose before it underwent a change in the year 1986 reads as follows: Section 2(f) prior to 1986 "(f) 'manufacture' includes any process incidental or ancillary of a manufactured product; and (i) to (iii).... (iv) In relation to goods comprised in Item No. 18-A of the First Schedule, includes sizing, beaming, warping, wrapping, winding or reeling or any one or more of these processes or the conversion of any form of the said goods into another form of such goods; and the word 'manufacture' shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who e....
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....g, or any one or more of these processes, or the conversion of any form of the said products into another form of such products shall amount to 'manufacture'. The duty on sized yarn shall be charged on the basis of its weight before sizing. 2. In relation to products of Heading Nos. 52.06 to 52.12 bleaching, mercerising, dyeing, printing, water proofing, shrine proofing,, organdie processing or any other process or any one or more of these processes shall amount to 'manufacture'. From the above the notable and deliberate omission in respect of the Note dealing with yarn is mercerising which finds a place while dealing with fabric. A comparison of the old definition with the new definition of 'manufacture' so far as cotton yarn and cot....