2003 (10) TMI 460 - AT - Central Excise

Summary

Issues:
Challenge to duty demand and penalty imposition on Polyester Sewing Thread manufactured from Filament Yarn; Interpretation of duty payment on imported yarn; Whether doubling of single yarn amounts to a process of manufacture; Applicability of exemption notification; Time-bar on enforcement of demands.

Analysis:
The appellants contested the Order-in-Original confirming duty demand and penalty on Polyester Sewing Thread made from Filament Yarn. The Revenue argued that the filament yarn did not incur duty, only additional duty under the Customs Act, citing a Supreme Court judgment. The appellants' Vice President argued that doubling single yarn does not constitute manufacture, referencing relevant Tribunal and Apex Court judgments. He highlighted that the imported yarn had already suffered additional duty, akin to Excise Duty, making the exemption notification applicable. The Tribunal had previously ruled demands as time-barred in similar cases.

The Revenue relied on the Commissioner's findings, emphasizing that manufacturing in India necessitates payment of excise duty, which the appellants failed to pay, making them ineligible for the exemption notification. After reviewing submissions and records, it was acknowledged that the imported yarn had indeed incurred additional duty, equivalent to Central Excise Duty, as per a Supreme Court ruling. The Tribunal noted that the process of doubling yarn does not amount to manufacture, aligning with previous judgments, and thus duty on the multi-folded yarn was not applicable. The Tribunal reiterated that demands on double yarn were unjustified, and the benefit of exemption did not arise.

The Tribunal concluded that no duty was leviable on the polyester sewing thread due to it being multi-fold yarn, not subject to duty. The payment of additional duty, equated to excise duty per Supreme Court precedent, further supported the appellants' entitlement to the exemption notification. The Tribunal emphasized that the process of doubling yarn did not constitute manufacture, aligning with established legal precedents. Consequently, the demands were considered time-barred, leading to the appellants' success in the appeal. The impugned order was set aside, and the appeal was allowed based on the cited judgments.