2001 (7) TMI 469 - AT - Central Excise

Summary

Issues:
1. Whether duty of excise is payable at the time of removal of goods from the factory after yarn was doubled or multi-fold or at the single yarn stage.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the question of excise duty liability for M/s. Adinath Textiles Ltd. The issue was whether duty of excise is payable by them at the time of removal of goods from the factory after yarn was doubled or multi-fold, or if duty is payable at the single yarn stage.

Arguments by Appellant:
Shri K.K. Anand, the advocate for the Appellant, argued that they were discharging duty liability at the spindle stage based on Trade Notice No. 17/94. He mentioned that a subsequent Trade Notice amended the procedure, stating that excise duty would be chargeable only at the time of removal. The Appellant contended that they had discharged duty liability as per the initial Trade Notice and that no additional duty was demandable. They also cited relevant case law, including the decision of the Supreme Court in C.C.E., Jaipur v. Banswara Syntex Ltd., to support their position.

Arguments by Respondent:
On the other hand, Shri P.K. Jain, representing the Respondent, argued that excise duty must be paid on the yarn as it is removed from the factory for home consumption. He relied on the decision in C.C.E., Chandigarh v. Oswal Wollen Mills Ltd. to support the contention that duty should be payable at the stage of clearance of double and multi-fold yarn.

Tribunal's Decision:
The Tribunal considered the submissions of both parties and referred to Rules 9 and 49 of the Central Excise Rules, which deem excisable goods to have been removed from the premises upon consumption or utilization. Citing the Supreme Court decision in Banswara Syntex Ltd., the Tribunal held that excise duty liability arises on the manufacture of single ply yarn and not after doubling or multi-folding. The Tribunal emphasized that duty is payable at the single yarn stage, regardless of further processes. Additionally, the Tribunal noted the benefit of Notification No. 26/94, as amended by Notification No. 90/94, which provides for a nil rate of duty on double or multi-fold yarn if appropriate duty has been paid on the single ply yarn. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the Appellant.