2004 (3) TMI 496 - AT - Central Excise

Summary

Issues:
Classification of waste arising from synthetic yarns for duty payment.

Analysis:
The appellants, engaged in manufacturing yarns and fabrics, paid duty on yarn at spindle stage and claimed waste arising from synthetic yarns as "Hard Waste" exempt from duty as it was already duty borne. The dispute revolved around the duty liability on waste emerging from synthetic yarns, as opposed to cotton yarn exempt under the Central Excise Tariff Act, 1985. The lower authorities upheld duty payment on waste, leading to the appeal.

The Tribunal noted the absence of exemption for waste of synthetic yarns in the tariff, unlike the full exemption for cotton yarn waste. The waste in question was generated from duty paid yarn used within the factory, with no legal basis provided by the lower authorities for demanding duty. The Tribunal criticized the lack of understanding of excise law by the lower authorities, emphasizing that duty paid on the parent yarn should suffice, regardless of the subsequent use or transformation of the yarn into waste, unless it results in the manufacture of a different taxable commodity.

Regarding the scope of tariff entry for synthetic waste yarn, the Tribunal highlighted that waste yarn emerging from duty paid yarn cannot be subjected to duty again under Section 2(d) of the Central Excise Act, as excisable goods are defined as those subject to excise duty. Since the parent yarn had already been dutied, the waste yarn could not be deemed liable for duty unless explicitly provided by law. Consequently, the Tribunal set aside the lower authorities' orders, allowing the appeal and granting consequential relief in line with the law.