2000 (9) TMI 536 - AT - Central Excise

Summary

Issues:
Confirmation of duty on yarn at bobbin stage for captive use in the manufacture of reel hank.

Analysis:
The appellant contested the duty confirmation based on the conversion of yarn from one stage to another stage not amounting to manufacture or removal under Rules 9 and 49. The appellant relied on previous Tribunal decisions and argued that the conversion of yarn does not result in the emergence of another commodity, as yarn remains yarn throughout the process. The appellant highlighted that the definition of manufacture of yarn in the Central Excises & Salt Act is the same as defined in the new Central Excise Tariff Act, 1985, and thus, the duty cannot be charged when yarn is consumed captively without resulting in a new commodity. The appellant also referenced previous orders where similar demands were dropped, emphasizing that no appeal was filed against those decisions.

The Revenue, represented by the JDR, pointed out Chapter Note 1 of Chapter 52, which states that the conversion of yarn from one form to another shall amount to manufacture, justifying the duty levied on yarn at bobbin stage for captive use in the manufacture of reel hank.

The Commissioner (Appeals) upheld the duty confirmation, citing Chapter Note 1 of the Central Excise Tariff Act, 1985, as the basis for levying duty on yarn at the bobbin stage. The Commissioner rejected the appeal, emphasizing that the conversion of yarn into another form constitutes manufacture, making the duty on yarn at bobbin stage justifiable. The Commissioner's decision was based on the interpretation of the tariff provisions and the definition of manufacture.

In the final judgment, the Tribunal reviewed the arguments from both sides and analyzed the definition of manufacture under the Central Excise Tariff Act, 1985. The Tribunal noted that the definition of manufacture remained the same as in the previous legislation and concluded that the conversion of yarn from one stage to another does not amount to the manufacture of a new commodity. The Tribunal agreed with the appellant's position that yarn remains the same product throughout the conversion process and set aside the duty confirmation, allowing the appeal.

In summary, the Tribunal ruled in favor of the appellant, emphasizing that the conversion of yarn from bobbin stage to reel hank stage does not constitute the manufacture of a new commodity, as yarn remains consistent throughout the process. The Tribunal's decision was based on the interpretation of the definition of manufacture under the relevant legislation and previous Tribunal decisions, ultimately setting aside the duty confirmation on yarn at the bobbin stage for captive use in the manufacture of reel hank.