1994 (9) TMI 186 - AT - Central Excise

Summary

Issues:
Classification of waste arising in the manufacture of texturised yarn out of duty-paid filament yarn under Tariff Item 18-IV for assessment at Rs. 9/- per kg.

Analysis:
The Collector, Central Excise, Ahmedabad challenged the order of the Collector Central Excise (Appeals) regarding the classification of waste arising in the process of texturing duty-paid filament yarn. The Collector (Appeals) held that the waste should be exempt from duty as it was not covered under Tariff Item 18-IV and was known as waste of duty-paid filament yarn. The appeal succeeded, and the impugned order was set aside, directing the classification of the waste as exempt from duty instead of Rs. 9/- per kg.

The respondents manufactured texturised yarn from duty-paid waste yarn and claimed assessment of waste at a concessional rate of duty under Notification No. 214/79. The Asstt. Collector assessed the waste at Rs. 9/- per kg under Tariff Item 18-IV. The respondents contended that waste arising from texturised yarn did not fall under Tariff Item 18-IV as per the explanation below the item. They argued that filament yarn and texturised yarn are distinct commodities and should be assessed at different rates. The respondents emphasized that the waste should not be classified under Tariff Item 18-IV and should be exempt from duty.

The ld. SDR representing the department argued that the exemption under Notification No. 214/79 applied only to crimped yarn waste under Tariff Item 18-IV. He contended that waste arising during the manufacture of texturised yarn, other than crimped yarn, should be liable to duty at Rs. 9/- per kg under Tariff Item 18-IV. The department's position was that the waste in question was correctly assessed at Rs. 9/- per kg, and Notification No. 239/83 did not apply to the disputed goods.

After considering the submissions, the Tribunal analyzed whether the waste in question fell under Tariff Item 18-IV. The Tribunal found that the waste did not arise in the manufacture of man-made fibres or filament yarns, as specified under Tariff Item 18-IV. The waste resulted from the process of converting duty-paid filament yarn into texturised yarn, making it ineligible for classification under Tariff Item 18-IV. Additionally, the Tribunal noted the inconsistency in duty rates between good yarn and waste, further supporting the decision that the waste should not be assessed at Rs. 9/- per kg.

In conclusion, the Tribunal upheld the impugned order, rejecting the appeal and determining that the waste in question was not classifiable under Tariff Item 18-IV. Therefore, it was not liable to be assessed at Rs. 9/- per kg, leading to the dismissal of the appeal.