2003 (1) TMI 105 - SC - Central Excise

Whether the appellant is liable to pay central excise duty on the manufacture of the single ply yarn or at the stage when the single ply yarn is converted into double ply yarn/multi-fold yarn when the same is cleared from the factory? Held that - So far as the questions involved in these appeals are concerned, they are concluded by the judgments of this Court in Bhilwara and Banswara ( 1994 (1) TMI 107 - SUPREME COURT OF INDIA ). Therefore, the tribunal was justified in placing reliance on the same while rejecting the appeal of the appellants.

Summary

Issues:
Whether central excise duty is payable on the manufacture of single ply yarn or at the stage when it is converted into double or multi-fold yarn.

Analysis:
The appellant, engaged in manufacturing manmade fabric, produces single ply yarn used in further processing. The dispute revolves around the liability to pay central excise duty - whether on manufacturing single ply yarn or when it is converted into double or multi-fold yarn and cleared from the factory. The revenue asserts duty is exigible on single ply yarn production, while the appellant argues duty should be paid when the finished product is cleared. The authorities demanded duty at the single ply yarn stage due to higher duty rates then.

The tribunal, relying on previous judgments, rejected the appellant's appeal. The appellant's counsel acknowledged unfavorable precedents but sought reconsideration based on another judgment. However, the Supreme Court found no merit in this argument. The Court clarified that duty can be collected at a later date for administrative convenience, but this principle doesn't apply to the current case.

In a previous case, the Court held that excise duty arises on manufacturing single ply yarn, not on further doubling or multi-folding. The Court affirmed the earlier judgments and concluded that duty liability attaches at the single ply yarn stage, in line with Central Excise Rules and relevant provisions. The Court dismissed the appeal, upholding the tribunal's decision based on consistent legal precedents.

In summary, the Court's decision is guided by established judgments holding that duty liability arises at the single ply yarn manufacturing stage. The tribunal's reliance on these precedents is deemed justified, leading to the dismissal of the appeals in line with legal principles established in earlier cases.