TMI Blog1983 (9) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, and used these two yarns as constituents, to produce a multiple fold yarn, by the processing of doubling and twisting. During the period from October, 1975 to June, 1976, the appellant cleared this final product, by paying duty at the 3rd stage by treating it to be : yarn, all sorts, not elsewhere specified , as contemplated by entry 18E of the Central Excise Tariff, as then prevailing. They availed of benefit of exemption of Notification No. 30/75-C.E., dated 1-3-1975, which pertained to Tariff Item 18E. 3. The Department tentatively took the view that the central excise duty was payable at all the three stages, namely, on the two constituent yarn separately, and finally on the multiple fold yarn. Accordingly show cause-cum-demand notice was issued, requiring the appellant to show cause as to why the amount of duty on these constituents, namely, cotton yarn and staple yarn on the basis of the production and clearances, be not recovered in accordance with the rates prescribed for these items. The total amount of duty was quantified, for the aforesaid period, to be ₹ 1,38,573.94. They were also informed that their act was tantamount to removal of the goods without payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fold yarn, involved three different stage attracting three different tariff items. He observed that prior to this process of doubling or multiple folding; the cotton yarn was in cone, from T.I. 18A, and the staple yarn in similar form, covered by T.I. 18 and both were in deliverable stage, and quite fit to be recorded in RG 1 records, and to that extent they attracted levy of central excise duty when removed in cones to the doubling machine for doubling, which resulted in the manufacture of a separate yarn covered by T.I. 18E. This ultimate product was a yarn not elsewhere specified , as contemplated under T.I. 18E because it was a combination of different percentages as revealed by the chemical analysis report. He further took note of the fact that the Company had themselves declared the final product, as multiple fold yarn, falling under T.I. 18E, and had paid excise duty accordingly, and that the contention now being set forth that it was not any excisable item at all, was contradictory to their own earlier declaration. He further took note of the fact that it was not a case of doubling of similar yarns, but combinations of two different yarns, namely, one cotton and one stapl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd others, to the effect that excise duty could be levied on excisable goods, and that it could be levied on different stages at which the goods underwent transformation, and new goods or commodities are brought into existence, and that change of identity or emergence of new article or commodities was the test for levying excise duty afresh . He consequently held that the observations of the Gujarat High Court quoted by him made it clear that the moment a new marketable commodity, resulting in change of identity, and answering to the description of a tariff item comes into existence, then duty under that tariff heading had to be paid. 7. The Appellate Collector after formulating the issues involved as being; firstly, whether there had been change in the identity of goods, that is, had their been any manufacture?, secondly, had there been a new marketable commodity, and thirdly as to whether this new commodity answered the description of Item 18E, came to the finding that the appellants started with one type of yarn, namely, cotton yarn and another type of synthetic yarn, and twisted them to a form a third type of yarn, bringing about a positive change of identity in the constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nceded that the appellant on its own had classified this final product to be falling under T.I. 18E, and had filed declaration accordingly with reference to this tariff item, read with Notification No. 30/75. He very fairly conceded that he did not dispute the fact that this process of doubling and twisting of two different types of yarns, involved the process of manufacture, and to that extent he would not press the contention that no manufacturing process was involved. He also conceded that excise duty was payable on the constituent yarns also, namely, cotton yarn and staple yarn, and that the same had not in fact been paid. The contention however which he put forward very vehemently was that nevertheless this final product could not be treated, as falling under T.I. 18E, even as it stood prior to its amendment, with effect from 18-6-1977. His main emphasis was on the fact that the term yarn has not been defined anywhere in the tariff but the established meaning of this term was that yarn was, what was spun from fibre. He referred, in support of his contention, to glossary of terms, published by I.S.I. being IS-232/1967 in support of this contention, and also referred to the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntertained. He further argued on merits, that Tariff Item 18E as it read prior to 1977 did not stipulate that it would be only confined to spun yarn and that it could cover any blended or mixed yarn, not elsewhere specified . He also distinguished the authority of Gujarat High Court cited on behalf of the appellant, namely, that of Ahmedabad Manufacturing and Calico Company Ltd. v. U.O.I. (1976 Cen-cus P. 25 D) and argued that this only related to pre-1972 period and only traced the history of Item 18, and had no bearing on the point at issue. He referred to party s own classification, as to this yarn being classified as multiple yarn under T.I. 18E, and duty having been accordingly paid. He laid great emphasis on the fact that when the legislative entry was clear, and there was no ambiguity as to the trade usage and parlance, one does not have to go to dictionary or technical meaning. He referred to a Supreme Court authority in support of this contention reported as 1981 E.L.T. P. 325 (Indo International Industries v. Commissioner of Sales Tax, U.P.), laying down that in case of a term or expression being defined in the enactment, the same be understood in the light of the defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the market as a particular variety of yarn, having a distinct usage which the appellants themselves describe to be multiple or fancy yarn . It apparently does not fall under any of the specific tariff headings, enumerated above. The fact that this product was a yarn, besides not being disputed at this stage, is otherwise borne out from the fact that it is so described in the invoices prepared at the time of clearances, and from the conduct of the party in voluntarily classifying it as falling under Tariff Entry 18E at the relevant time. It was only when, the demand was made for payment of duty on constituent yarns also, which liability is also being conceded now, that the appellants turned round and repudiated liability to pay excise duty on this final product, having already paid the same on their own declaration. We are of the firm view that the appellants contention to the effect that any yarn to fall under Tariff Entry 18E must first satisfy the condition of being spun deserves to be rejected as it has no merit to consideration, for the simple reason, that the Tariff Entry at that time did not stipulate any such condition. The change which was brought with effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
