2012 (12) TMI 949 - AT - Central Excise

Levy of duty on the single ply spun yarn manufactured - Notification No. 214/86-C.E. - Held that - The Notification No. 214/86-C.E. exempts the goods specified in Col. 2 of the Table annexed to the notification manufactured in a factory as a job work and used in or in relation to the manufacture of final products specified in Col. 3 of the said Table, from the whole of the duty of excise, subject to certain conditions as specified in this notification. As per this notification, this exemption is available subject to the condition that the supplier of the raw materials (principal manufacturer) gives an undertaking to the jurisdictional Asstt. Commissioner having jurisdiction over the job work s factory, that the said goods manufactured by the job worker shall be used in or in relation to the manufacture of the final products in his factory and duty liability in respect of the same shall be discharged by him. In this case, no such undertaking given by the principal manufacturer has been produced. Moreover, we also find that while the goods manufactured by the appellants are the goods of Chapters 54 and 55, the Col. 2 mentioning the goods manufactured as job work eligible for exemption, does not cover the goods of Chapters 54 and 55. In view of this, the exemption under Notification No. 214/86-C.E. was not available to the single ply yarn manufactured by the appellant out of the fibres supplied by the principal manufacturer - Decided against Assessee.

Summary

Issues:
1. Duty liability on single ply spun yarn manufactured by the appellant.
2. Applicability of Notification No. 214/86-C.E. for duty exemption.
3. Jurisdictional aspects regarding duty discharge and goods classification under the notification.

Analysis:
1. The appellant, a textile unit owned by a Public Sector Undertaking, received manmade/synthetic fiber for manufacturing spun yarn on a job work basis. The dispute arose when the appellant cleared the spun yarn without duty payment, citing exemption under Notification No. 214/86-C.E. The department contended that duty was due on the single ply spun yarn during the relevant period. A show cause notice was issued for recovery of allegedly short paid duty, leading to an adjudication confirming the duty demand by the Commissioner.

2. The Tribunal initially dismissed the appeal due to unresolved disputes, but later restored it based on a Supreme Court judgment. The appellant argued that duty exemption applied as the spun yarn was used by the principal manufacturer in the manufacture of final products cleared on payment of duty. However, the department defended the duty demand, emphasizing the liability on the spun yarn even if used for doubling and the non-coverage of goods of Chapters 54 and 55 under the notification.

3. The Tribunal analyzed the provisions of Notification No. 214/86-C.E. and noted the absence of an undertaking from the principal manufacturer regarding duty discharge for the job work. Additionally, it found that the goods of Chapters 54 and 55, to which the spun yarn belonged, were not covered under the exemption notification. Considering the lack of duty exemption for the single ply yarn during the disputed period, the Tribunal upheld the duty demand, dismissing the appeal based on the duty liability of the appellant for the spun yarn cleared after doubling.

In conclusion, the Tribunal affirmed the duty liability on the single ply spun yarn manufactured by the appellant, ruling that the duty exemption under Notification No. 214/86-C.E. was not applicable due to jurisdictional aspects and non-coverage of relevant goods. The appeal was dismissed, upholding the duty demand imposed by the Commissioner.