1985 (4) TMI 285 - AT - Central Excise

Summary

Issues:
Interpretation of Central Excise Tariff - Duty on cotton yarn at intermediary stage.

Analysis:
1. The case involved a dispute regarding the duty payable on cotton yarn at the intermediary stage of production, specifically at the cone stage. The appellants manufactured multiple fold cotton yarn in plain reel hanks, which were fully exempt from duty. The Collector of Central Excise (Appeals) had ruled in favor of the respondents, stating that coning was an intermediary stage and did not require duty payment.

2. The Department argued that cones were included in the definition of dutiable forms of cotton yarn and that the expanded definition of 'manufacture' encompassed doubled yarn as a different commodity. They contended that duty should be paid at the cone stage as per Rules 9 and 49, amended in 1982 retrospectively. The Department's representative emphasized that duty had to be paid at every stage of change in the form of cotton yarn in the factory.

3. The respondents countered the Department's argument by asserting that cotton yarn in different forms did not constitute a new commodity necessitating repeated taxation. They highlighted that taxing cotton yarn at the cone stage would nullify the exemption granted to hank yarn, rendering it meaningless. The respondents did not seek further relief as the Collector (Appeals) had already allowed their appeal in full.

4. The Tribunal analyzed the provisions of Rules 9 and 49, determining that duty is chargeable upon removal of excisable goods for consumption, export, or manufacture of another commodity. The Tribunal disagreed with the Department's stance, stating that bobbins, cones, and hanks were all forms of cotton yarn as clarified in the Central Excise Tariff. It was concluded that single yarn and multiple fold yarn were variations of cotton yarn, not distinct commodities.

5. The Tribunal upheld the Collector (Appeals) decision, emphasizing that cotton yarn remained the same commodity at different stages of conversion until reaching the final form of hanks. Taxing cotton yarn repeatedly at intermediary stages would defeat the purpose of the exemption granted to hank yarn. The interpretation that leads to rendering any part of the statutory provision nugatory should be avoided. The Tribunal found no justification for imposing duty on cotton yarn multiple times within the same factory under the same Tariff Item.

6. In conclusion, the Tribunal found no fault with the Collector (Appeals) order and dismissed the appeal, affirming that duty payment was not required at the intermediary cone stage of cotton yarn production.