2005 (12) TMI 399 - AT - Central Excise

Summary

Issues:
Interpretation of manufacturing process for dyeing prior to 16-3-1995, Duty payment on dyed yarn, Adjustment of duty paid at spindle stage, Requantification of demand.

Analysis:
The appellant, engaged in yarn manufacture, faced duty demands for processes like bleaching and dyeing, considered as manufacturing by the Revenue. The Deputy Commissioner upheld the demand and imposed a penalty. The appellant contended that dyeing wasn't a manufacturing process before 16-3-1995, citing a Madras High Court decision. They argued for duty credit on yarn paid at spindle stage. The Tribunal noted Chapter Note 2's addition, deeming dyeing as manufacturing post-16-3-1995. Duty on dyed yarn was upheld, but duty paid at spindle stage needed adjustment against dyed yarn duty.

For the period pre-16-3-1995, lacking an equivalent Chapter Note, dyeing wasn't deemed manufacturing. However, as dyeing occurred in the same factory as yarn manufacture, the Supreme Court's Siddharth Tubes case applied, requiring duty on dyed yarn value inclusive of dyeing. The duty on undyed yarn already paid was to offset the dyed yarn duty. Thus, dyed yarn bore the duty liability. The Tribunal set aside the order, remanding for demand recalibration by the original authority.