1987 (10) TMI 51 - SC - Central Excise

Whether yarn obtained and further processed within the factory for the manufacture of fabrics could not be subjected to duty of excise?

Held that:- In the instant, case, the appellants are liable to pay Excise duty on the yarn which is obtained at an intermediate stage and, thereafter, further processed in an integrated process for weaving the same into fabrics. Although it has been alleged that the yarn is obtained at an intermediate stage of an integrated process of manufacture of fabrics, it appears to be not so. After the yarn is produced it is sized and, thereafter, subjected to a process of weaving the same into fabrics. Be that as it may, as we have held that the commodity which is obtained at an intermediate stage of an integrated process of manufacture of another commodity, is liable to the payment of Excise duty, the yarn that is produced by the appellants is also liable to payment of Excise duty. In our view, the High Court by the impugned judgment has rightly held that the appellants are not liable to pay any Excise duty on the yarn after it is sized for the purpose of weaving the same into fabrics. No distinction can be made between unsized yarn and sized yarn, for the unsized yarn when converted into sized yarn does not lose its character as yarn. Appeal dismissed.