2017 (5) TMI 873 - AT - Central Excise

Second round of appeal - Manufacture - whether the doubling of single yarn is amount to manufacture and liable to duty? - whether double yarn manufactured from duty paying single yarn is eligible for exemption under N/N. 35/95-CE? - Held that - Ground was not raised earlier - submission of the Ld. Counsel that doubling of yarn is amount to manufacture and whether the appellant is entitle for exemption N/N. 35/95-CE cannot be raised at this stage - However as regard the re-quantification of the duty. The adjudicating authority was not barred from making correct quantification not only by considering modvat aspect but also on other quantification therefore matter is remanded to the original adjudicating authority for re-quantification of the correct duty liability as claimed by the appellant that the duty liability is of ₹ 4,82,504/- and not ₹ 16,47,067/- - appeal allowed by way of remand.

Summary

Issues involved:
1. Whether the doubling of single yarn amounts to manufacture and is liable to duty.
2. Whether double yarn manufactured from duty paying single yarn is eligible for exemption under Notification No.35/95-CE.

Analysis:
Issue 1: The Tribunal had remanded the matter to the adjudicating authority for denovo adjudication to consider the modvat credit claimed by the appellant. The demand initially confirmed at ?49,55,814/- was reduced to ?16,47,067/-. The appellant argued that doubling of yarn does not attract separate excise duty based on a previous decision. The Revenue contended that the process of doubling yarn amounts to manufacture as per new chapter notes inserted in the budget for 1995-96. The Tribunal held that the issue of whether doubling of yarn amounts to manufacture or the appellant is eligible for exemption under Notification No.35/95-CE cannot be raised at this stage. The matter was remanded for re-quantification of the duty liability, setting aside the impugned order.

Issue 2: The appellant relied on a Supreme Court judgment to support their claim for exemption under Notification No.35/95-CE. The Revenue argued that the exemption does not apply to the appellant due to the single yarn manufacturing facility. The Tribunal emphasized that the focus of the appeal was on the quantification of duty demand, not on the eligibility for exemption. The adjudicating authority was directed to re-quantify the correct duty liability as claimed by the appellant. The appeal was disposed of by way of remand to the original adjudicating authority, ensuring the appellant is given an opportunity to explain the re-quantification.

Overall, the Tribunal clarified that the issue of whether doubling of yarn amounts to manufacture and the eligibility for exemption under Notification No.35/95-CE cannot be raised at the current stage. The focus was on re-quantifying the duty liability, leading to the matter being remanded to the original adjudicating authority for further consideration.