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TMI Blog1995 (7) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... the dutiability of cotton yarn, processed in the factory of production, for its clearance as plain (straight) reel hank yarn. A show cause notice was issued on 26-6-1984 to the appellants, and Central Excise duty amounting to Rs. 55,588.48 was demanded on the ground that the yarn of different counts was used for manufacture of twisted yarn in the doubling machine installed in the factory, and no central excise duty was paid thereon, and the goods were cleared under exemption after packing them in the plain (straight) reel hank form. The matter was adjudicated by the AC of C. Ex., Cuttack who confirmed the demand under Sec. 11A of the Central Excises Salt Act, 1944 (hereinafter referred to as the Act ), under his order in original dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and submitted that yarn removed for captive consumption had to discharge duty liability, and that the yarn was classifiable under erstwhile Item No. 18A of the First Schedule to the CESA, 1944 (hereinafter referred to as the Tariff ). The Ld. SDR relied upon the Tribunal decision in the case of Aditya Mills Ltd., Rajasthan v. CCE Jaipur, 1983 (14) E.L.T. 1853 (T), wherein it has been held that doubling and twisting of two different yarns amounted to manufacture of a new product, classifiable under Item No. 68 of the Central Excise Tariff. This Tribunal decision has been confirmed by the Hon. SC as reported in 1988 (37) E.L.T. 471 (SC). Reference was also made to the Tribunal decision in the case of Rajasthan Spinning and Weav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handlooms. Cotton yarn in cones reel hanks, whether single or multiple fold, of count not exceeding 20S (English count) was also exempted, subjected to the condition that such yarn is purchased by a registered handloom cooperative society or any organisation set up or approved by the Government for the development of handlooms, and payment for such yarn is made by cheque drawn by such cooperative society or organisation, as the case may be, on its own bank account. It was provided in proviso (iii) under the aforesaid notification that no further duty was leviable on any yarn which had availed of the exemption available to yarn in plain hank form, when wound on cones on doubling machines for conversion into two fold yarn, and then reeled int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered in a number of cases by different Courts, mainly in connection with Sales Tax. Thus, in Madura Mills Co. Ltd v. Government of Madras and Another, 25 S.T.C. 407 the Madras High Court was required to consider whether cotton tyre cord warp sheet could be considered as cotton yarn under the provisions of the Sales Tax Acts. The Court came to the conclusion that string, cord and rope are merely different species of the same genus, namely, yarn, and held that cord is cotton yarn in the accepted commercial sense. In Commissioner of Sales Tax, U.P. v. Sarin Textile Mills, 35 S.T.C. 634, the Supreme Court was required to consider whether woollen carpet Kati was yarn under the U.P. Sales Tax Act. The Supreme Court, after referring to the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso be made to Deputy Commissioner of Sales Tax v. Pai and Co., 45 S.T.C. p. 58, and State of Tamil Nadu v. Pyare Lal Malhotra - 37 STC p. 319. The classic test for deciding whether there is `manufacture of a new product or not is laid down in McNicol and Another v. Pinch, 1906 (2) Indian Law Reports K.B., 352. In that case, Darling J. observed that, in a sense, you can only make one thing out of another. The essence of making or manufacturing is that it shall be a different thing from that out of which it is made. In other words, we come back to the same test, namely, whether the product that emerges is something different from the thing out of which it is made. If yarn after twisting, remains yarn - although it is known as twine - , then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 983 (14) E.L.T. 1853 (Tribunal), a mixture of Polyester spun yarn and rayon filament yarn, which were called PPRF, was prepared out of duty paid yarns. In the case of CCE, Bombay v. Kohinoor Mills, 1995 (77) E.L.T. 42 (SC), the Hon. SC in paras 5 and 6 of their judgment have held that the liability to pay the excise duty on the manufactured item, will have to be decided in the light of the appropriate tariff applicable at the time when such manufactured commodity is cleared as per the provisions of the Excise Rules. The Duty becomes payable on a manufactured item once such goods were removed from the place of manufacture for consumption, export or manufacture of any other commodity in or outside such place. In the case before us in-process ..... X X X X Extracts X X X X X X X X Extracts X X X X
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