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Classification of weft yarn under Tariff Item 18E; Whether weft yarn is a new product under Central Excise Act; Challenge to show cause notice; Determination of excise duty on weft yarn; Process of manufacture of weft yarn; Evidence presented by respondents in support of their contentions. Analysis: The judgment in question involves an appeal challenging the classification of weft yarn under Tariff Item 18E and the determination of excise duty on the said yarn. The respondents, a textile mill, manufactured fabrics including Quality No. 1410 and Quality No. 1435, composed of 82% cotton yarn and 18% twinkle nylon yarn in the weft yarn. The excise duty was paid on both cotton yarn and the end-product fabric. The issue arose when the Excise authorities claimed that weft yarn was a new product excisable under Tariff Item 18E, leading to a show cause notice being served on the respondents for alleged contraventions of Central Excise Rules. The respondents contended that weft yarn did not constitute a new product as it was a combination of duty-paid yarns and did not involve a process of manufacture as defined under the Central Excise Act. The judgment analyzed the process by which weft yarn was produced, involving the inter-twinning of cotton and nylon yarns. The court noted that the mere inter-twinning of these yarns did not result in a new product, as evidenced by expert affidavits filed by the respondents. These affidavits highlighted that the weft yarn did not exhibit characteristics of a distinct product known to the trade or available in the market. The court emphasized that the evidence presented by the respondents, including expert opinions and trade affidavits, remained unchallenged by the Excise authorities. The court concluded that the process of inter-twinning cotton and nylon yarn with minimal twists did not amount to a process of manufacture, as no essential difference in identity was brought about. As a result, the judgment upheld the findings of the Single Judge, dismissing the appeal and emphasizing that no new product emerged from the production of weft yarn. The court's decision was in line with established legal principles, as exemplified in the case of Dy. Commissioner, Sales Tax v. M/s. Pio Food Packers.
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