1998 (1) TMI 241 - AT - Central Excise

Summary

Issues: Classification of yarn made out of staple fibre and filament yarn, whether doubling of yarn amounts to manufacture under Central Excise Act, applicability of duty on doubled yarn, classification under Central Excise Tariff, time limitation for demand.

In the appeal filed by M/s. Dawn Mills Co. Ltd., the issue revolved around the classification of yarn made from staple fibre and filament yarn where staple fibre did not predominate. The appellants contended that doubling or multi-folding of yarn did not constitute manufacturing under Section 2(f) of the Central Excise Act. They argued that since the staple fibre and filament yarn were already duty paid, no additional duty could be imposed on the doubled yarn produced. Moreover, they claimed that their product should be classified as twine, not doubled yarn. The Collector, Central Excise (Appeals), Bombay had classified the goods under sub-heading No. 5506.29 of the Central Excise Tariff and deemed the demand within the extended period of limitation calculated from the date of filing the RT 12 return.

The appellants sought a decision on the merits of the case. The Respondent, Shri Satnam Singh, argued that the appellants initially classified their goods as doubled yarn but later claimed they were twine to benefit from an exemption. He referenced the Collector's findings and contended that there was no basis for challenging the Appellate Authority's decision.

Upon careful consideration, the Tribunal examined the classification lists submitted by the appellants, which described the goods under sub-heading No. 5506.29 as yarn of Poly-Vis. Referring to a Supreme Court case, the Tribunal noted that doubling and twisting two different yarns constituted manufacturing under the Central Excise Act. The Tribunal emphasized that the transformation into a new commodity with distinct characteristics amounted to manufacturing, as per legal precedents cited. The Tribunal found no grounds to interfere with the Collector's decision, which classified the goods under the relevant sub-heading and upheld the time limitation for the demand.

The appellants contended that their goods fell under Chapter 56 of the Tariff, covering various textile materials, including twine. However, the classification list described the goods as doubled yarn, not twine. The appellate authority determined that the composition of the yarn did not align with the characteristics of twine, as defined. The distinction between twisting and doubling was crucial in this context.

After reviewing the evidence, the Tribunal concurred with the Collector's classification and time limitation assessment. It found no errors in the Collector's decision and rejected the appeal, affirming the original classification and duty liability on the doubled yarn manufactured by M/s. Dawn Mills Co. Ltd.