2004 (6) TMI 429 - AT - Central Excise

Summary

Issues:
Levy of duty on the process of sizing of yarn post-amendment of Chapter Notes 2 to Chapter 52 or/and Chapter 55; Applicability of Notification 35/95-C.E., dated 16-3-95 as amended by Notification No. 84/95, dated 18-5-95; Whether sizing of yarn constitutes a process of manufacture.

Analysis:
The issue at hand pertains to the levy of duty on the process of sizing yarn, post-amendment of Chapter Notes 2 to Chapter 52 or/and Chapter 55, and the applicability of Notification 35/95-C.E., dated 16-3-95 as amended by Notification No. 84/95, dated 18-5-95. The lower authorities rejected the appellant's contention that sizing of yarn does not amount to a process of manufacture, citing the Supreme Court's decision in the case of J.K. Ltd., 1987 (32) E.L.T. 234 (S.C.). The appeals were made on these grounds.

Upon examination of Chapter Notes 1 to 52 and Note 2 to Chapter 55 of the Central Excise Tariff schedule introduced in the Budget of 1995, it was observed that the grounds of appeal did not provide any basis other than reliance on previous court decisions. The Tribunal upheld the levy of duty by the lower authority, emphasizing that sizing of yarn on duty-paid yarn would constitute manufacture as per Section 2(f)(ii) of the Central Excise Act, 1944. The section specifies that processes specified in the Section or Chapter notes of the Central Excise Tariff Act, 1985, as amounting to manufacture would attract duty liability.

Consequently, the Tribunal concluded that the process of sizing yarn falls within the ambit of manufacture, leading to duty liability, and as the exemption under Notification 35/95-C.E., dated 16-3-95 as amended was deemed inapplicable, the appeals were dismissed for lacking merit. The decision was based on the interpretation of relevant legal provisions and previous court rulings, affirming the lower authority's decision on the matter.