LexCOLLECTOR OF CENTRAL EXCISE, JAIPUR versus BANSWARA SYNTEX LTD.
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A COLLECTOR OF CENTRAL EXCISE, JAIPUR v. BANSWARA SYNTEX LTD. NOVEMBER 26, 1996 B [A.M. AHMADI, CJ., J.S. VERMA AND B.N. KIRPAL, JJ.] Central Excises and Salt Act, 1944-Section }-Central Excise Rules, 1944-First Schedule, Tariff Item No. 18--Yam-Whether a single ply yam is liable to excise duty-HELD, the liability to pay excise duty arises at the time C of manufacture of single ply yam and not after the same has been doubled or multifolded. The Superintendent of Central Excise issned a demand notice to the Respondent-Company to pay excise duty for single ply yarn used to dou- bling process without pa)ment of duty. The company filed reply to the D Assistant Collector, Central Excise, who had confirmed the demand notice issued by the Superintendent. Aggrieved by this order, Respondent-com- pany filed an appeal before the Collector [Appeals] who set aside the Assistant Collector's order by holding that the duty was chargeable at the stage of doubling or multifolding. E F G Against this order, Appellant-Collector of Central Excise filed an appeal before the Customs, Excise and Gold [Control] Appellate Tribunal, which was dismissed. Hence this appeal by the Appellant-Collector of Central Excise. On behalf of the appellant, it was contended that the liability to pay excise duty arises at the time single ply yarn was manufactured and dou- bling or multifolding of the single ply yarn does not bring into existence an excisable item and single ply yarn would be subject to duty upon its manufacture. Allowing this appeal, this Court HELD : 1.1. A single ply yarn is first manufactured and thereafter it is doubled or multifolded depending upon the type of fabric which is ul- timately 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 H or multifolded. Doubling or multifolding of the same yarn does not bring 194 COllECTOROFCENfRALEXCJSEv. BANSWARASYNIBXLID.[KIRPAL,J.]195 into existence a new product and no duty is leviable at that stage. [197-E-F] A J.K Spinning and Weaving Mills Ltd. andAnr. v. U.O.I., (1987) 32 ELT 23 S.C. relied on. 2. The liability to pay excise duty arises at the first stage itself, namely at the time of manufacture of single ply yarn. This being so the B demand raised by the Assistant Collector is not invalid. [198-F] Bhilwara Spinners Ltd. v. Collector of Central Excise, (1996) 82 ELT S.C. 442 referred to. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6622 of C i995. From the Order dated 11.6.92 of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. E/1767/85-D & E/Co/419/91-D.(Order No. E/247/92-D. With Ci\il Appeal No. 1778 of 1987. M.S. Usgaonkar, Additional Solicitor General, V.K. Verma and A D Sobba Rao for the Appellant. E DA Dave, Ms. Ruby Ahuja for Ms. M. Karanjawala for Respondent. The Judgment of the Court was delivered by KIRPAL, J. The respondent company is engaged in the manufacture of yarn falling under tariff item no. 18, 18B and 18E of the Central Excise Tariff. It manufactures single ply yarn and it also, in the course of its manufacturing process, ~oes doubling and multifolding of the yarn. F The respondent was paying excise duty, in case of doubled or multi- folded yarn, on the weight of doubled or multifolded yarn and no excise G duty was being paid on the single yarn which was being used for doubling or multifolding. A show cause notice dated 4th September, 1982 was issued by the Superintendent of Central Excise asking the respondent to pay a sum of Rs. 35,190.96 as central excise duty which had been short paid during the year 1978-79 on the ground that it had utilised 4,56,456.10 Kgs. of single ply yarn for doubling process without payment of duty. H 196 SUPREME COURT REPORTS (1996] SUPP. 9 S.C.R. A The respondent filed its reply dated 10th September, 1982, inter alia, B contending that there had neither been any removal nor any utilisation of the yarn resulting in the production of a new commodity and, therefore, duty had been paid correctly at the time of removal after doublingimulti- folding of the yarn. It appears that when the single ply yarn is doubled or multifolded there is some wastage. If duty is paid on the production of single ply yarn the respondent would not get the benefit of exclusion of the waste which arises when that single ply yarn is used in the process of doublingimu
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