2006 (11) TMI 392 - AT - Central Excise

Summary

Issues: Appeal against Commissioner's order regarding manufacturing of high twisted yarn without duty payment.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Ahmedabad involved a dispute regarding the manufacturing of high twisted yarn without duty payment. The Commissioner had dropped the proceedings based on the opinion of a chemical examiner, stating that the high twisted yarn was eligible for full exemption under various notifications. The appellant contended that the process of manufacturing crepe yarn involved twisting and untwisting yarn, which constituted a new product chargeable to duty as per Chapter Note 3 of Chapter 54. The appellant argued that the resulting crepe yarn was a distinguishable product with new properties. Additionally, the appellant highlighted that the process undertaken led to a new commodity with different qualities, properties, and end-uses, amounting to manufacture under the Central Excise Act and Tariff Act.

In response to the appeal, the respondents argued that high twisted yarn was commercially known as crepe yarn in trade parlance and that the process of high twisting enhanced the value of the product without changing its material composition. They referenced previous decisions in favor of other manufacturers of high twisted yarn by the Commissioner, which were not appealed by the department. The respondents also pointed out that the order of the Commissioner was binding on excise authorities if no further appeal had been filed before the Tribunal, citing a relevant case law.

The Tribunal considered the raw material used, which was texturised/twisted yarn, and the process of high twisting involved. It noted that the chemical examiner confirmed that the resultant product was also twisted yarn. Given the findings that no new product had emerged and the benefit granted to similarly placed assessees by the Commissioner, the Tribunal rejected the appeal by the department. The Tribunal's decision was based on the lack of emergence of a new product and the precedent set by the Commissioner's previous decisions in favor of other manufacturers of high twisted yarn. The judgment was pronounced on 30-11-06 by the members of the Tribunal, Ms. Archana Wadhwa, and Shri M. Veeraiyan.