2003 (12) TMI 525 - AT - Central Excise

Summary

Issues:
1. Liability to pay duty on doubled yarn.
2. Availability of Modvat credit for duty paid on single yarn.
3. Exemption from payment of duty under notification 35/95.

Analysis:
1. The appellant was involved in doubling yarn in its factory and cleared the doubled yarn without paying duty. The issue was whether the process of doubling yarn constituted manufacture, making the appellant liable to pay duty as per the Central Excise Tariff. The Commissioner (Appeals) upheld the duty demand, stating that doubling was a process deemed to be manufacture as per the Tariff notes.

2. The appellant contended that if duty was payable on doubled yarn, credit for duty paid on single yarn should be available for discharging that duty. The Commissioner (Appeals) rejected this argument, citing that the duty on doubled yarn was not paid despite being aware of the liability, and the Modvat claim was made belatedly. However, it is established that Modvat credit cannot be denied solely due to the timing of the claim, and the appellant's assertion of exemption under notification 35/95 was noted.

3. The Tribunal acknowledged that the denial of Modvat credit solely based on the timing of the claim is not valid. The appellant's argument that duty payment on single yarn should entitle them to credit for duty on doubled yarn was accepted. The Tribunal remanded the matter to the adjudicating authority to verify the payment of duty on the single yarn that was doubled. Consequently, the appeal was allowed, setting aside the previous order demanding duty on the doubled yarn.

This comprehensive analysis of the judgment highlights the key issues of duty liability, Modvat credit availability, and exemption under notification 35/95, providing a detailed understanding of the Tribunal's decision and legal principles applied in the case.