2005 (5) TMI 391 - AT - Central Excise

Summary

Issues:
Whether single yarn and double yarn are distinct commercial items and whether manufacturing process is involved in making double yarn out of single yarn?

Analysis:
The appeal raised the issue of whether single yarn and double yarn, manufactured from single yarn, are distinct commercial items and whether the manufacturing process is involved in creating double yarn from single yarn. The Appellate Commissioner concluded that both single yarn and double yarn are different excisable goods and attract separate excise duty. However, the Tribunal referred to a previous decision where it was held that the process of doubling or multifolding of yarn does not create a new product, questioning the distinctness of single and double yarn. The appellant argued that the Supreme Court's decision in a related case did not explicitly state that doubling or multifolding single yarn does not constitute a manufacturing process. The Supreme Court emphasized that excise duty liability arises at the time of manufacturing single ply yarn, indicating a potential manufacturing process in creating double yarn.

The judgment also referenced a specific notification prescribing 'NIL' duty for double or multifold yarn manufactured from yarn on which appropriate excise duty has already been paid. This notification implies that double or multifold yarn is considered to be manufactured from yarn that has already been subject to excise duty. Consequently, the question arose as to whether single yarn and double yarn are distinct excisable goods attracting separate excise duty and whether a manufacturing process is involved in producing double yarn from single yarn. Given the complexity and differing interpretations, the matter was deemed necessary for consideration by a Larger Bench to provide clarity on the issue.

As a result, the Registry was instructed to present the case before the President for further action to refer it to a Larger Bench for detailed examination and resolution of the questions regarding the distinction between single yarn and double yarn as excisable goods and the involvement of a manufacturing process in producing double yarn from single yarn.