2006 (7) TMI 399 - AT - Central Excise

Summary

Issues: Duty payment on polyester texturised yarn (PTY) before twisting and dyeing process, interpretation of notification 35/95-CE regarding duty exemption for twisted and dyed PTY.

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the issue revolved around the duty payment on polyester texturised yarn (PTY) before the twisting and dyeing process. The appellants contended that they had paid duty on the PTY before subjecting it to subsequent processes. Initially, duty was paid at Rs. 98/- per Kg, and later at Rs. 106/- per Kg due to a change in duty calculation method. The department argued that duty should have been paid on the value of twisted and dyed PTY, not just on the PTY itself. The tribunal analyzed notification 35/95-CE, as amended by notification 77/95-CE, which exempted twisted and dyed PTY from duty if manufactured from duty-paid PTY. The tribunal noted that duty had indeed been paid on the PTY before the twisting and dyeing processes, meeting the conditions of the notification. Therefore, the tribunal held that the appellants fulfilled the requirements under the notification, and the twisted and dyed yarn was exempt from duty due to the prior payment on the PTY. Consequently, the impugned order was set aside, and the appeal was allowed.

This judgment clarifies the importance of understanding the duty payment requirements for specific processes in manufacturing and the significance of complying with relevant notifications to claim exemptions. It highlights the need for precise interpretation of legal provisions and notifications to determine the correct duty liability in manufacturing scenarios.