1999 (5) TMI 115 - AT - Central Excise

Summary

Issues:
Whether the exemption for "yarn, double or multifolded, manufactured out of yarn falling under Chapter 52, 54, or 55" extends to the yarn manufactured by the appellant.

Analysis:
The main issue in this case revolves around determining whether the yarn manufactured by the appellant qualifies for the exemption under Notification No. 53/91. The appellant argues that their yarn should be considered as "double or multi fold yarn" and thus eligible for the exemption. On the other hand, the Revenue contends that the yarn in question is cabled yarn and does not fall under the category of "double or multi fold yarn" as per the notification. The Revenue also highlights that cabled yarn was granted nil rate of duty only after the amendment in Notification No. 23/92, issued by the Central Government.

The appellant's representative argues that there is no specific mention or distinction of "double or multi fold yarn" in the tariff, and therefore, reliance on the HSN Explanatory Notes for classification is not valid. They assert that even cabled yarn should be considered a form of multi fold yarn, as per the Textile Dictionary definition. The appellant contends that the amending Notification No. 23/92 should be seen as a clarificatory notification, including cabled yarn within the ambit of "double or multi fold yarn" under Notification No. 53/91.

Furthermore, the appellant relies on a Trade Notice from the Bombay Collectorate, emphasizing that sewing thread, defined as multi fold or cabled yarn, was extended the benefit of a similar notification. They argue that since the two notifications, 53/87 and 53/91, are similar, cabled yarn should also be entitled to the exemption under 53/91.

On the contrary, the Revenue argues that the distinction between "double fold or multi fold" and cabled yarn based on the number of twisting operations is crucial. They assert that the yarn in question involves multiple twisting operations, making it cabled yarn, which was granted exemption only after the amendment in Notification 53/92.

After considering the arguments from both sides, the Tribunal concludes that the Central Excise Tariff does not explicitly mention "double fold, multi fold, or cabled yarn." Therefore, relying on the HSN Explanatory Notes for interpretation is deemed unjustified. The Tribunal agrees with the appellant's representative that the reliance on the Bombay Collectorate Trade Notice of 1987 is appropriate. Consequently, the Tribunal sets aside the lower authorities' orders and allows the appeal, granting consequential relief to the appellant.