1994 (1) TMI 154 - AT - Central Excise

Summary

Issues:
1. Duty payable on waste nylon yarn during the manufacture of tyre cord and tyre cord fabrics.
2. Interpretation of deferment of duty permission granted by the Collector of Central Excise.
3. Whether doubling and twisting of nylon yarn amount to manufacture.
4. Time limitation for the demand of duty.
5. Contradictory views on duty liability between the Judicial Member and the Vice President.

Analysis:
1. The appeal concerned the duty liability on waste nylon yarn during the manufacture of tyre cord and tyre cord fabrics. The Asst. Collector proposed a duty levy on the quantity of nylon yarn lost during the process, alleging misuse of duty deferment permission. The Collector (Appeals) held that duty should be paid on waste nylon yarn occurring during the manufacturing process.

2. The interpretation of the deferment of duty permission granted by the Collector of Central Excise was crucial. The Vice President observed that duty deferred on nylon yarn for the manufacture of tyre cord and fabric had to be paid at the time of clearance of the fabric, considering the entire quantity of yarn issued for manufacturing.

3. The issue of whether doubling and twisting of nylon yarn amount to manufacture was debated. The Judicial Member opined that such processes did not constitute manufacturing, citing relevant case laws. However, the Vice President disagreed, emphasizing that the conversion of single nylon yarn into tyre cord created a distinct commodity, necessitating duty payment on the entire quantity of yarn.

4. The question of time limitation for the demand of duty was raised. The respondents argued that the demand was time-barred, beyond six months from the show cause notice. However, the extended period of limitation was deemed applicable due to the nature of the case, as decided by the Vice President.

5. A difference of opinion arose between the Judicial Member and the Vice President regarding duty liability. The matter was referred to the Hon'ble President for a third Member's opinion. The Member (T) agreed with the Vice President, emphasizing the duty payment on the entire quantity of yarn used for manufacturing tyre cord, leading to the allowance of the Department's appeal.

In conclusion, the majority opinion supported the Department's appeal, emphasizing the duty liability on the entire quantity of yarn issued for manufacturing tyre cord and fabric. The differing views on duty liability and the interpretation of manufacturing processes were key aspects of the judgment, ultimately resolved in favor of the duty payment requirement.