1997 (8) TMI 236 - AT - Central Excise

Summary

Issues:
1. Duty on coned yarn before clearance for captive consumption in the manufacture of hank yarn.

Analysis:
The case involved three appeals filed by M/s. Mahavir Spinning Mills against the Order-in-Appeal dated 23-1-1996 regarding the clearance of Cross Reel Hanks without duty payment under Notification No. 26/94-C.E. The department contended that duty should be discharged on yarn on cones consumed in manufacturing cross reel hanks. The Collector (Appeals) upheld this view, leading to the appeals. Another appeal by M/s. Tuticorin Spinning Mills raised the same issue of duty on coned yarn before clearance for captive consumption. The Collector also ruled against the assessee, consolidating these appeals due to a common issue.

The advocates for the appellants and the revenue presented arguments citing various judgments. The appellants relied on past Tribunal judgments, notably the Orissa Weavers Cooperative Spinning Mills case, while the revenue cited the Supreme Court's decision in the case of M/s. Kohinoor Mills. The Tribunal analyzed these arguments along with other relevant judgments to determine whether duty was payable on yarn in cone form before captive consumption for hank yarn manufacturing.

The Tribunal examined the core issue of whether duty was applicable to yarn on cones before captive consumption for hank yarn production. Referring to past judgments, including the Orissa Weavers Cooperative Spinning Mills case, the Tribunal concluded that no duty was warranted on cones consumed for hank production cleared without duty payment. The Tribunal differentiated between various yarn forms and emphasized that no new products emerged during intermediary processes before hank clearance. The Tribunal's decision aligned with previous rulings and dismissed the revenue's argument based on the Kohinoor Mills case.

After thorough consideration of the issue and cited judgments, the Tribunal found no justification for imposing duty on cones consumed for hank manufacturing, especially when the hanks were cleared without duty payment. Consequently, all four appeals succeeded, overturning the Collector's orders and granting appropriate relief to the appellants.