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TMI Blog2023 (5) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... t of single yarn stage and after doubling/folding and winding process, it never forms a new product rather it remained cotton yarn. It is the case of the Appellant that there is no transformation of the product and the final product is made in a continuous process, no duty was payable. Conversion of unsized yarn into sized yarn is not liable to central excise duty and it still remains yarn and after such manufacturing process, it does not loose its character as yarn since such processes are undertaken in a continuous process to manufacture the final products i.e. yarn. Show Cause Notice dated 20.01.1992 was issued demanding Central Excise duty of Rs.4,92,424/- for removal/clearance of 10,55,266.316 kgs. of cotton yarn in bobbin/cone f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This order is a glaring example of arbitrariness in the decision making process. 3. The Ld. Advocate vehemently argued that the Ld. Commissioner should have restrained himself from taking up the matter since he himself had reviewed the order of the Adjudicating authority and he himself has decided the Appeal. As such it was difficult for him to take a different stand from the stand taken in the review order. It is the case of the Appellant that cotton yarn in straight reel hank falling under heading 52.03 of the Schedule to the Central Excise Tariff Act, 1985 was exempted from payment of Central Excise duty. There is no dispute in the present case that the Appellants had cleared the cotton in straight reel hank. Reel and straight reel ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ping, winding or reeling or any one or more of these processes for conversion of any form of the said products into another form of such product amounted to manufacture and on the ground that since the stage in which it was actually removed by the said assessee i.e. straight reel hank cotton yarn exempted from duty of excise, therefore the duty was not leviable since final product is exempted vide Notification No. 187/83 dated 09.07.1983. Undisputedly Cotton Yarn in straight reel hank falling under heading NO. 52.03 of the Schedule to the Central Excise Tariff Act, 1985 was exempted from payment of Central Excise duty. There is also no dispute in the present case that the Appellants had cleared the cotton yarn in straight reel hank and prim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yarn in Section 2(f)(iv) of the Central Excises & Salt Act in relation to the goods comprised in item No. 18-A of the first Schedule is exactly the same as defined in Note 1 of Chapter 52 of CETA, 1985. As such it cannot be said that the new tariff extends the scope of the term 'manufacture'. He submits that the duty under Rules 9 and 49 (as amended) can only be charged when yarn is consumed captively for the manufacture of any other commodity. Inasmuch as conversion of yarn from bobbin stage to reel hank stage does not result in emergence of another commodity, inasmuch as yarn remains yarn, the confirmation of demand of duty is not justified. He also made reference to Commissioner (Appeals)'s Calcutta order (Order No. 57/Cal-II/90 dated 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable on yarn at bobbin stage for captive use in the manufacture of reel hank in terms of Rules 9 and 49, although the latter is exempted from payment of duty. The judgment delivered by the CEGAT in the case of Orissa Cotton Mills being passed relating to the period prior to introduction of CETA, 1985 is not relevant to the impugned order-in-original, confirming the demands is legal and proper and, thus, the same does not call for interference with. Accordingly, I uphold the order-in-original and reject the appeal". 5. A reading of the above para of Commissioner (Appeals) order shows that strong reliance has been placed by him on Chapter Note 1 of the Chapter 52 of the Central Excise Tariff Act, 1985. We find that identical definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise Tariff or commercially. The stages of bobbins, cones/cheeses, doubling bobbins and hanks in the respondents' factory are stages in the manufacture of cotton yarn in the final multiple fold yarn in plain (straight) reel hanks and it is only in this final form that cotton yarn is removed out of their factory. We, therefore, agree with the Collector (Appeals) that all through cotton yarn remains only cotton yarn at different stages of its conversion till it reaches the final form in hanks and there is no transformation from one commodity to another. The charge of duty under Rules 9 and 49 cannot arise since at the bobbins or cone stage there is no removal either for consumption or for export or for manufacture of some other commod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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