2004 (3) TMI 496

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..... : K.D. Mankar, Member (T)]. The appellants are engaged in the manufacture of various yarns and fabrics. The appellants have opted for payment of duty on the yarn at spindle stage. The said duty paid yarn, after payment of duty, is taken up for further use within the factory. During the course of use of the duty paid yarn a certain quantity emerges as waste. The appellants had declared the sa .....

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..... e yarn on payment of duty within the factory for further use. The waste is generated out of this duty paid yarn. It has not been demonstrated in the orders of the lower authorities as to the legal basis on account of which the duty can be demanded from the appellants. It seems to us that there is an utter lack of understanding of the excise law at the level of the lower authorities in this case. I .....

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..... n the fibres are subjected to the process of spinning yarn, the emergent yarn as well as emergent waste are required to pay duty being the excisable goods of the respective headings. However, the waste yarn emerging after subjecting the duty paid yarn to manufacturing process cannot be subjected to the duty, for the reason that such waste yarn generated out of duty paid yarn cannot come within t .....

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