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TMI Blog2009 (9) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, it is observed that the assessee no doubt filed classification list regarding manufacture of yarn and sewing thread. They have also not filed any returns relating to such production and clearances of yarn so used for sewing thread. We have not been shown that the Department was made aware of the fact that the assessee was clearing yarn without payment of duty and using it for the purpose of manufacture of sewing thread. In view of the above we hold that there is willful suppression of relevant facts and therefore the extended period is rightly invocable. On the same grounds, the penalty under Section 11AC is also sustainable. Therefore, we are in agreement with the submissions of learned DR that the Commissioner (Appeals) was not justified in reducing the penalty under 11AC to an amount lower than the duty short paid. However, in the facts and circumstances of this case we do not find justification for a separate penalty under Rule 25 of the Central Excise Rules. - E/41 and 54/2005 - 690-691/2009-EX(PB), - Dated:- 3-9-2009 - Justice R.M.S. Khandeparkar, President and Shri M. Veeraiyan, Member (T) Shri Aalok Arora, Advocate, for the Appellant. Shri V. Choudhary, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty sustained by the Commissioner (Appeals). On the other hand, the Department is aggrieved that the Commissioner (Appeals) has reduced the penalty from Rs.6,38,329/- to Rs.30,000/- under Section 11AC and Rs.10,000/- from Rs.1 lakh under Rule 25. 4. Learned Advocate for the assessee made the following submissions:- (i) They have submitted details of manufacture of yarn as well as sewing thread and also furnished the process of manufacture of sewing thread starting from cotton. They have filed classification list in respect of cotton yarn and for sewing thread and in respect of the later claimed the exemption under Notification No. 8/2002. (ii) They were under the bona fide belief that inasmuch as no duty was payable on sewing thread, the cotton yarn used for manufacture of sewing thread was also not liable for duty. However, on being pointed out by the officers, who visited the factory, they paid the duty as applicable at the stage of double yarn stage. The non-payment of duty at the time of clearance of yarn for sewing thread was a bona fide mistake. (iii) The demand of duty invoking extended period of limitation was not warranted; the duty should be worked out at the sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om both the sides. Sewing thread is apparently manufactured by the processes which include doubling the single yarn, then the double yarn is put to hank form, twisted, waxed and thereafter wrapped in cones/sold in reels. It is also brought to our notice that in respect of products covered under Headings 52.04, 52.05 and 52.06 chapter note 1 prescribes a special definition for manufacture which read as under: "In relation to products of heading Nos. 52.04, 52.05 and 52.06, the process of dyeing, printing, bleaching, mercerizing, twisting, texturising, doubling, multiple-folding, cabling or any other process or any one or more of these processes, or the conversion of any form of the said products into another form of such products shall amount to manufacture." Relying on this, learned DR canvassed that the yarn continue to be yarn till it reached the stage of waxing and that duty should be charged on the waxed double cotton yarn as held by the original authority. We have to appreciate that in Chapter 52, there are separate entries for cotton yarn and cotton sewing thread. It cannot be the case that cotton yarn can reach the stage of cotton sewing thread without any process being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e production of an excisable article, the duty can be levied and collected at a later date for administrative convenience". The said principle cannot be applied to the facts of the case in these appeals. 5. In the case of Banswara Syntex (supra), a three Judge Bench of this Court dealing with identical issue as is involved in this appeal held: "A single ply yarn is first manufactured and thereafter it is doubled or multifolded depending upon the type of fabric which is ultimately to be woven. The liability to pay excise duty would arise on the manufacture of the single ply yarn and not after the same has been doubled or multi-folded. Doubling or multi-folding of the same yarn does not bring into existence a new produce and not duty is leviable at that stage. It is immaterial, in view of Rule 9(1) of the Central Excise Rules and Section 49 of the Act whether the yarn so manufactured is captively consumed or is subjected to any other or further process". 6. In this case, this court also approved the earlier judgment in Bhilwara Spinners Ltd., and it further held that the decision of this Court in the case of M/s. J.K. Cotton Spinning Weaving Mills Ltd. and Anr. v. Union ..... X X X X Extracts X X X X X X X X Extracts X X X X
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