Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2015 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (1) TMI 889 - AT - Central ExciseCaptive consumption - Valuation of goods - assessable value of the spun yarn at the spindle stage - Held that:- During the period prior to 16-3-1995 there was Chapter Note 1 to Chapter 52 which provided that in relation to the products of Headings 52.03 and 52.04, sizing, beaming, warping, wrapping, winding, reeling or any one or more of these processes or conversion of any form of the said product to the another form of such product shall amount to manufacture and the duty on the sized yarn shall be charged on the basis of its weight before sizing and there was similar chapter note in respect of spun yarn, man-made staple fibres in Chapter 55. However, w.e.f. 16-3-1995 Chapter Note 1 of Chapter 52 was replaced by a new note providing that in relation to the products of Headings 52.04, 52.05 and 52.06 the process of printing, bleaching, mercerizing, twisting, texturising, doubling, multifolding, cabling or any other process or any one or more of these processes or the conversion of any form of the said product into another form of such product shall amount to manufacture. Similar amendment was made w.e.f. 16-3-1995 in the corresponding Chapter Note of Chapter 55. Thus, w.e.f. 16-3-1995, the process of winding i.e. transferring the yarn from bobbins to cones was no longer a process of manufacture. In view of this, there is no question of adding the cost of winding by charging duty on the spun yarn at spindle stage. - impugned order, therefore, upholding the duty demand of ₹ 1,79,269/- is not sustainable and the same is liable to be set aside. - Decided in favour of assessee. In terms of the Chapter notes to Chapters 52 and 55 the doubling/multifolding of single ply yarn was to be treated as process of manufacture. However, the duty demand on the yarn manufactured in the unit and at the spindle stage, i.e. yarn on bobbins which was in fully finished condition and whose quantity has been accounted for in the RG-1 register, by adding to its value, the value of subsequent processes - winding/cheese winding/singeing and doubling/multifolding would not be sustainable, as when the single ply yarn is in fully finished condition at the spindle stage and is issued for weaving, it has to be treated as having been cleared at that point of time and hence the cost of subsequent processes which are the processes preparatory to weaving, cannot be added to the cost of yarn, even though those processes may amount to manufacture. Moreover, the subsequent processes - winding, doubling or multifolding are fully exempt from duty in terms of Notification No. 35/95-C.E. and successor exemption Notifications No. 8/96-C.E., 4/97-C.E., 5/98-C.E., 5/99-C.E., 6/2000-C.E. and 3/2001-C.E. subject to the condition that the processes have been carried out on the duty paid yarn which is meant for weaving of fabrics within the factory and in these cases it is not in dispute that the single ply yarn was duty paid and the same had been used within the factory for weaving. Since doubled/multifolded yarn is cleared for captive consumption within the factory for manufacture of fabrics the cost of winding, sungeing doubling/multifolding gets included in the cost of fabrics which is cleared on payment of duty. Duty on cost of these processes cannot be charged at single yarn stage by including the cost of these processes in the value of yarn at the spindle stage. We, therefore, hold that the duty demand confirmed by the Commissioner by the impugned order is not sustainable and for this reason, there is also no merit in the appeal filed by the Revenue. - Decided in favour of assessee.
|