1987 (2) TMI 399 - AT - Central Excise

Summary

Issues:
1. Whether central excise duty was leviable on the yarn content of small cut pieces of cotton fabrics known as "Chindies" at the highest rate under Rule 49A of the Central Excise Rules, 1944 read with Notification No. 131/77-C.E., dated 18-6-1977.

Analysis:
The appeal was initially filed as a revision application before the Central Government and later transferred to the Tribunal for disposal as an appeal. The appellants did not appear during the hearing, but they requested the appeal to be disposed of on merits based on their written submissions. The issue in question revolved around the levy of central excise duty on the yarn content of "Chindies" under specific notifications and rules.

The appellants argued that the cut pieces of cotton fabrics were waste arising incidentally to the manufacturing process and were fully exempted from duty under relevant notifications. They contended that both the "Chindies" and the yarn content were waste and thus exempt from duty. They further claimed that it was impractical to determine the count of yarn used in mixed-up "Chindies," making the levy of duty on yarn content unjustified.

However, the Tribunal disagreed with the appellants' contentions. It was noted that the appellants had opted for a special procedure under Rule 49A, where duty on yarn was collected at the clearance stage of fabrics. The Tribunal determined that the yarn content in the "Chindies" did not qualify as waste yarn exempted under a specific notification, as the yarn was in a continuous length after manufacturing, not in cut pieces as required by the exemption. Therefore, the duty on yarn was deemed leviable, and charging duty at the highest rate was deemed justified due to the unascertainable count of yarn content.

Ultimately, the Tribunal found no merit in the appellants' arguments and upheld the lower authorities' orders, dismissing the appeal. The decision was based on the interpretation of relevant notifications and rules, concluding that the duty on yarn content of "Chindies" was valid and not exempt under the circumstances presented.