2017 (3) TMI 1447 - AT - Central Excise

Captive consumption - Valuation of goods - assessable value of the spun yarn at the spindle stage - N/N. 35/1995-CE dated 16.03.95 - Held that - the issue has already been settled in their favor in their own case JCT LIMITED Versus COMMISSIONER OF CENTRAL EXCISE, JALLANDHAR 2015 (1) TMI 889 - CESTAT NEW DELHI , where it was held that Since doubled/multi folded yarn is cleared for captive consumption within the factory for manufacture of fabrics the cost of widing, singeing and doubling/multi folding gets included the cost of fabrics which is cleared on payment of duty. Duty on cost of these processes cannot be charged at single yarn stage by including the cost of these processes in the value of yarn at the spindle stage - the impugned order qua demanding duty from the appellant is set aside and consequently, that part of the order is allowed. As the appellant has not pressed the issue for consideration of the refund claim, therefore, on the said ground the appeal is dismissed as not pressed. Appeal disposed off - decided partly in favor of assessee.

Summary

Issues:
Assessable value of spun yarn at spindle stage, applicability of Central Excise Valuation Rules, duty demand on processes of winding, reeling, warping, doubling/multi folding, dyeing, sizing, beaming, exemption notifications, penalty imposition, settlement of issue in appellant's favor.

Analysis:
The case involved a composite mill engaged in textile yarn and fabric manufacturing. The dispute centered on the assessable value of spun yarn at the spindle stage, subjected to various processes before being used for fabric manufacturing. The appellant accounted for the yarn on spindles in the RG-1 register and paid duty based on cost data under Central Excise Valuation Rules. The department argued that processes post-spindle added value, justifying a duty demand. The Commissioner's order dropped certain demands but confirmed duty on specific processes for cotton and manmade yarn. The Commissioner also imposed penalties. The appellant contended that a previous tribunal order favored them, seeking to set aside the demand. The issue's settlement in the appellant's favor was acknowledged by the Authorized Representative and the Assistant Registrar.

The Tribunal referred to the previous order, noting that doubling/multi folding of single ply yarn was considered a manufacturing process. However, duty demands on fully finished yarn at spindle stage, subjected to subsequent processes preparatory to weaving, were deemed unsustainable. The subsequent processes were duty-exempt if carried out on yarn meant for weaving within the factory. As the yarn was duty-paid and used for weaving within the factory, adding process costs to spindle stage yarn value was unwarranted. The Tribunal ruled the duty demand unsustainable, citing relevant exemption notifications and Apex Court judgments. Consequently, the order demanding duty was set aside, and the appeal partly allowed. The appellant's non-pursuance of refund claims led to the dismissal of that aspect of the appeal.

In conclusion, the Tribunal's detailed analysis clarified the applicability of duty demands on yarn processes, emphasizing duty exemption conditions and the inapplicability of adding process costs to spindle stage yarn value. The settlement in the appellant's favor based on previous tribunal orders and legal provisions resulted in the dismissal of the duty demand and partial allowance of the appeal.