1997 (1) TMI 348 - AT - Central Excise

Summary

Issues: Applicability of Rule 49A and dutiability to unutilised yarn converted into straight reel hanks.

Analysis:
The case involved a dispute regarding the dutiability of yarn on unused bobbins and remnants of yarn converted into straight reel hanks under Notification 47/90. The appellants, a composite textile mill, argued that the conversion of yarn in the preparatory section should not be considered as manufacturing. They contended that duty is collected on yarn in the form cleared from the spinning unit, and there should be no discrimination against composite units in this regard. On the other hand, the JDR reiterated the findings of the lower authorities, emphasizing the duty liability on yarn before conversion into straight reel hanks.

The Tribunal carefully considered the arguments presented by both sides. It noted that while cotton yarn is recorded from spindle stages, the marketable form of yarn is in the form of bobbins, cones, and hanks. The Tribunal found that once yarn is taken on bobbins by the appellants, it becomes marketable and hence dutiable. The duty on such yarn gets deferred when used in weaving fabric, but if unutilized bobbin yarn is converted into hanks, it must discharge its duty liability. The Tribunal also addressed the discrimination claim raised by the appellants, stating that there was a lack of evidence to support their argument and that the question of discrimination cannot be raised before the Tribunal.

Ultimately, the Tribunal dismissed the appeal of the appellants, finding no substance in their arguments. The judgment upheld the dutiability of unutilized yarn converted into straight reel hanks and emphasized the duty liability on such yarn before conversion.