1985 (3) TMI 257 - AT - Central Excise

Summary

Issues:
1. Violation of principles of natural justice in the assessment process.
2. Eligibility for exemption under Notification No. 95/61-CE.
3. Interpretation of the term "manufacture" in relation to cotton yarn.

Detailed Analysis:
1. The Appellant contended that the original assessment on RT 12 was in violation of natural justice principles as no opportunity to present their case was given. The subsequent notice to show cause did not result in proper adjudication, rendering the assessment illegal. The Appellate Tribunal agreed that the proceedings were vitiated due to the lack of opportunity to be heard during the assessment and failure to adjudicate on the show cause notice. The Tribunal concluded that the case required remand for proper adjudication but decided to dispose of it themselves after a detailed hearing.

2. The Appellant claimed exemption for waste cotton yarn under Notification No. 95/61-CE, which was approved in the Classification List. The Tribunal observed that the Notification did not specify the stage at which waste cotton yarn should result to be eligible for the exemption. It was clarified that the benefit of the exemption was not limited to waste arising at the spindle point before sizing. Additionally, the Tribunal noted that the yarn cleared under the Gate Passes was not of the count specified for duty assessment, further supporting the Appellant's position.

3. The Tribunal analyzed the term "manufacture" in relation to cotton yarn levy under Item 18A of the Act. It was highlighted that sizing, being a process incidental to yarn manufacturing, was included in the definition of "manufacture" under Section 2(f) of the Act. The Tribunal referred to a 1964 amendment clarifying that sizing is part of the manufacturing process for goods under Item 18A. Consequently, the Tribunal concluded that the exemption under Notification No. 95/61-CE extended to cotton waste resulting from sizing of yarn. Therefore, the Tribunal allowed the Appeal, quashed the unadjudicated show cause notice, and directed relief for the Appellant.