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M/s. Salem Textiles Ltd. Versus CCE, Salem

2015 (5) TMI 975 - CESTAT CHENNAI

Denial of MODVAT Credit - benefit of Notification No. 5/99-CE dated 28.02.1999 vide Sl.No. 137, which exempts yarn subjected to process of winding with or without the aid of power and on which duty has been paid and the process of doubling the yarn is undertaken in a continuous process - Held that:- Appellants are bringing duty paid single yarn and undertaking the process of winding and twisting and doubling the yarn, and counts wound in a cone in one integrated process and claimed the benefit o .....

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exempts multiple or cabled yarn manufactured in a factory which does not have the facilities for producing single yarn. We find that the Apex Court in the case of Swastic Rayon Processors (2006 (11) TMI 31 - SUPREME COURT OF INDIA), has held that twisting and doubling of yarn does not amount to manufacture and the yarn continues to be yarn.

As the appellant has received only duty paid single yarn and carried out the process of doubling, twisting, winding all in one process on TFO ma .....

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ible for the exemption under the above notification, the question of availing of MODVAT Credit on the inputs does not arise - Decided in favour of assessee. - E/1081/2004 - Final Order No. 41428 / 2015 - Dated:- 19-5-2015 - Shri R. Periasami, Technical Member And Shri P.K. Choudhary, Judicial Member For the Petitioner : Shri Sujith Kumar, Adv., For the Respondent : Shri K.P. Muralidharan, AC (AR) ORDER Per: P.K. Choudhary The appellant M/s. Salem Textiles Limited is a Public Limited Company inco .....

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ess of winding the same after doubling and twisting the yarn and claimed the benefit of Notification No. 5/99-CE dated 28.02.1999 vide Sl.No. 137, which exempts yarn subjected to process of winding with or without the aid of power and on which duty has been paid and the process of doubling the yarn is undertaken in a continuous process. When the duty paid single yarn undergoes the process of doubling and twisting in the appellant s factory the same was fed into two for one (TFO) machine, wherein .....

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achine and clear the same without payment of duty. Vide OIO No. 6/2001 dated 21.03.2001, the adjudicating authority demanded duty of ₹ 13,03,841/- and imposed a penalty of ₹ 15,000/- under Rule 173 Q. The claim for Modvat credit made by the appellant was also rejected on the ground that the appellant had not followed the procedure while availing the credit. 3. The Ld. Commissioner (Appeals) in the impugned order dated 07.05.2004 permitted modvat credit on the inputs to the extent of .....

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the assessee Shri Sujith Kumar, reiterated the grounds of appeal and relied on the decision in the case of CCE, Hyderabad Vs. Sr. Raja Rajeshwara Co.op. Spinning Mills Ltd. - 2004 (170) ELT 350 (Tri.-Bang.), wherein it has been held that singly ply yarn continue to remain single ply and no new product come to existence and merely because of the process of winding on the cops, the goods do not become different. He further submitted that the order of the Commissioner (Appeals) is based on flawed r .....

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onal duty leviable under Section 11 of the Custom House Act, 1975 (51/1975), has already been paid. Since the duty paid on single yarn is being subjected to the process of winding, the same is squarely covered by Sl. No. 137 of Notification 5/99. The Ld. Counsel relied on the following decisions in this regard. 1. New Shorrock Mills Vs. CCE, Vadodara 2006 (202) E.L.T. 192 (Tri. - LB) 2. CCE, Mumbai Vs. Swastik Rayon Processors 2007 (209) E.L.T. 163 (S.C.) 3. CCE, Jaipur Vs. Banswara Syntex Ltd. .....

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nding and the cone yarn received would be cleared in the cone form only after the process of winding; that the yarn had been purchased from M/s. S.P. Mills by M/s. Arthanari Loom Centre, Salem after payment of duty; that the yarn was subjected to the process of dyeing in the premises of M/s. Arthanari Loom Centre and then supplied to them for the process to be undertaken by them; that the yarn so received was first subjected to the process of doubling in their TFO machine; that after completion .....

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rest, Jockey Pulleys, Inner Pot, Spindle, Jockey Pulley lever, Intermediate Frame, Top sheet, Pro-takeup Roller, Take-up Roller, Cradle Handle, Top tray and spindle tape and this machine is not meant for winding but it is specifically manufactured for twisting operation only. There is no evidence on record to show that after the twisting operation in this TFO machine, they are doing the process of winding by using Cone-winder in their unit. In the absence of evidence, it cannot be accepted that .....

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.) 2. Bhilwara Synthetics Ltd. Vs. CCE, Jaipur 2002 (143) ELT 22 (S.C.) 7. Heard both sides and on perusal of the records we find that the appellants are bringing duty paid single yarn and undertaking the process of winding and twisting and doubling the yarn, and counts wound in a cone in one integrated process and claimed the benefit of Notification No. 5/99 dated 28.02.1999 vide Sl.No. 137. The decision relied upon by the Ld. Counsel in the case of Sr. Raj Rajeshwara Co.op. Spinning Mills Ltd. .....

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ra), has held that twisting and doubling of yarn does not amount to manufacture and the yarn continues to be yarn. The relevant portion of the said decision of the Hon ble Supreme Court is reproduced as under:- 6. Counsel appearing for the revenue strenuously argued that this Court has taken contrary views in two different sets of cases. He has referred to Porritts & Spencer (Asia) Ltd. v. Collector of Central Excise, New Delhi reported in 1995 Supp. (3) SCC 219; Collector of Central Excise, .....

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utta v. Bowreah Cotton Mills Ltd. reported in (1997) 11 SCC 106 which are in favour of the revenue. 7. The point involved in this appeal has specifically been dealt with by this Court in Porritts & Spencer (Asia) Ltd. (supra) which held that doubling or multi folding of yarn does not result in the emergence of a new commodity and that the yarn continues to be yarn and, therefore, this process does not amount to manufacture. Similar is the view taken by this Court in Banswara Syntex Ltd.; Raj .....

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