1998 (9) TMI 191 - AT - Central Excise

Summary

Issues:
1. Whether duty should be paid at the single ply yarn stage or the multi-fold/double-fold stage.
2. Interpretation of relevant judgments of the Apex Court.
3. Double charging of duty on the same commodity.

Issue 1:
The case involved a dispute regarding the payment of duty by the appellants at the single ply yarn stage or the multi-fold/double-fold stage. The appellants contended that they paid duty at the multi-folded and double-folded yarn stage, which was more advantageous from a revenue perspective due to higher value addition at that stage. However, the Revenue issued a show cause notice alleging that duty should have been paid at the single ply yarn stage as the product was marketable at that stage. The Revenue relied on judgments of the Apex Court to support their claim.

Issue 2:
The Advocate for the appellants argued that the Apex Court judgments cited by the Revenue were not applicable to the current case. He highlighted that the Apex Court had previously ruled that doubling or multi-folding of the same yarn does not create a new product, and duty is not leviable at that stage. The Advocate emphasized that charging duty twice on the same commodity is impermissible. He supported this argument by referencing several Tribunal judgments that aligned with the appellants' position.

Issue 3:
The JCDR representing the Revenue reiterated the findings of the adjudicating authorities and relied on the Apex Court judgments mentioned earlier. However, the Tribunal, after careful consideration, found that the Revenue's reliance on the Apex Court judgments was misplaced. The Tribunal clarified that no duty was charged at the double-fold/multi-fold stage in the Banswara Syntex Ltd. case. Additionally, in the Bhilwara Spinners case, duty was charged only on waste yarn arising during the double folding stage, not on the yarn itself. The Tribunal emphasized that double or multi-folding does not create a new product, and duty cannot be charged twice on the same commodity under the same tariff heading.

In conclusion, the Tribunal set aside the impugned order and allowed the appeals in favor of the appellants, stating that the demand for duty at the single yarn stage was not tenable. The judgment emphasized that duty, once paid at the multi-fold/double fold stage, cannot be demanded again at the single ply yarn stage, as it would amount to double charging on the same commodity.