1999 (6) TMI 128 - AT - Central Excise

Summary

Issues Involved:
1. Whether Central Excise duty is chargeable when 100% Polyester yarn is converted into 100% spun polyester thread under Item 18E of the Central Excise Tariff.

Analysis:
The appeal in question pertains to the issue of Central Excise duty liability when 100% Polyester yarn is transformed into 100% spun polyester thread falling under Item 18E of the Central Excise Tariff. Despite the absence of the Appellants during the proceedings, the Tribunal proceeded with the case. The Appellants argued against the imposition of duty twice under the same Tariff item, citing a previous Tribunal decision. They contended that duty cannot be levied again on spun polyester thread and sewing thread under the same Tariff item, asserting that Rule 56A of the Central Excise Rules does not determine duty liability. The Respondent, represented by Shri V.M. Udhoji, supported the Collector (Appeals) findings, referencing previous Tribunal decisions where duty was imposed on finished goods manufactured from duty-paid raw material under the same Tariff item.

The Collector (Appeals) noted that sewing thread undergoes a manufacturing process resulting in a new substance distinct from the original yarn, justifying duty imposition. The Tribunal highlighted that Rule 56A applies when both raw material and finished product fall under the same item, emphasizing that the rule is triggered when a new product with different characteristics emerges from the manufacturing process. The Tribunal rejected the Appellants' argument that Rule 56A was inapplicable since both products were made in the same factory. It was established that if a new product with unique attributes is created from the raw material, manufacturing occurs as per the Central Excise Act's definition. Consequently, the Tribunal upheld the Collector (Appeals) decision, dismissing the appeal.

This detailed analysis of the judgment provides a comprehensive overview of the legal issues, arguments presented by both parties, and the Tribunal's reasoning leading to the final decision.