1995 (10) TMI 164 - AT - Central Excise

Summary

Issues:
Whether the process of doubling of yarn from single yarn to double yarn amounts to manufacture, and if so, whether duty is payable as per demands raised by the Department.

Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi involved a common question of law and facts regarding whether doubling of yarn constitutes manufacture and if duty is payable. The appeals were consolidated for disposal. The dispute centered on whether doubling of yarn from single to double yarn qualifies as manufacturing, leading to duty obligations.

In some instances, the Assistant Collector agreed with the assessees that doubling of yarn does not amount to manufacture, resulting in dropped proceedings. Conversely, in other cases, duty was confirmed by the Assistant Collector, but dropped by the Collector (Appeals). The Department sought a review of the Collector (Appeals) decision, which was rejected. The Revenue contended that both types of yarn fell under Item 18A of the Tariff. However, the Collector (Appeals) held that the yarns fell under different items and considered the doubled yarn as a new excisable commodity, leading to duty imposition.

The assessees argued that the Collector erred in categorizing the yarns under different items, as it was an admitted fact that single yarn fell only under Item 18A. They maintained that doubling of yarn did not constitute manufacture, citing previous Tribunal judgments on the matter.

During the hearing, both parties acknowledged that the issue had been previously addressed by the Tribunal, which consistently held that doubling of single ply yarn did not amount to manufacture or attract duty under Rules 9 and 49. Citing specific cases, the Tribunal reaffirmed its stance on the non-leviability of duty for such processes.

After reviewing the submissions and records, the Tribunal agreed with both parties' contentions. It held that the issue was settled, and doubling of yarn did not amount to manufacture, aligning with previous Tribunal decisions. Consequently, the Tribunal dismissed the Revenue appeals and allowed the assessees' appeals by overturning the Collector (Appeals) orders.