TMI Blog1980 (10) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... edule to the Central Excises Salt Act, 1944, ("the Act," in brief) and utilises the yarn within its own factory for the purposes of making man-made fabric. The yarn spun in the factory of the petitioner is wound on the bobbins and thereafter transferred to cones for the purpose of preparing a larger package. There is no dispute that the yarn as wound on cones in the petitioner's factory is a commodity that is ordinarily bought and sold in the market as yarn which is an item of goods excisable under Item 18E aforesaid. 3. However, instead of selling the cones in the market the petitioner company uses the yarn for the manufacture of fabric within the same composite mill. For this purpose the yarn is subjected to various processes which are preparatory to the actual weaving process and which facilitate the weaving of the yarn into fabrics. For the purpose of weaving yarn into fabric about 500 cones of yarn are taken and the yarn therefrom is transferred to a warp beam, which has the same number of ends. The fabric to be made consists of a warp and a weft. The warp is taken from the warp beams to which the cones of yarn have been transferred. After the yarn is transferred to the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom its premises of manufacture and is used within the same premises, no duty of excise could be levied thereon. Alternatively, the contention of the petitioner company was that even if the yarn manufactured in the assessee's factory was liable to excise duty on the basis of weight as set out in the Tariff, the duty should be levied on the basis of the weight of the yarn as manufactured and wound on the cones. As against this the Excise Department claimed that duty would be levied on yarn on the weight of sized-yarn and not on its weight before it underwent the process of sizing. The fifth respondent by his letters dated 26th April, 1979, 30th April, 1979 and 5th May, 1979 insisted, in reply to the petitioner's repeated representations, that the matter has already been finally discussed before the higher authorities that you have to pay duty on the above yarn on its weight before issue for weaving i.e. after sizing as directed......failing which suitable action will be taken under rules as the matter is being delayed unduly. The second respondent had issued a letter to all Collectors of Central Excise on 6th October, 1976 which contained, inter alia, the following sentences : The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and directly covered by a number of earlier decisions of this court. As mentioned earlier, the contention of the petitioners is based on the decision in the case of The Delhi Cloth General Mills Co. Ltd. (1978 E.L.T. J 121) which has been earlier referred to. This case has been followed and the relevant principles discussed and illustrated in the judgment to this court in Caltex Oil Refining (India). Limited v. Union of India (1979 E.L.T. J 581), to which one of us was a party. The same principle has also been enunciated by this court in the case of Modi Carpets Limited and Another v. Union of India (1980 E.L.T. 320 Delhi). This Bench has also had an occasion to consider the same questions in the cases of The Collector of Central Excise v. Mis. J.K. Synthetics Ltd. (L.P.A. 21/77) - 1981 (8) E.L.T. 5 and Devi Dayal Electronics Wires Ltd. Another v. Union of India (C.W. 219/78). In view of these decisions we do not consider it necessary to discuss the matter elaborately once again. It has been pointed out in these decisions that under Section 3 of the Act the levy and collection of excise duty has to be in the manner prescribed under the Act. The section therefore, has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yarn that is wound up on the cones is removed by the assessee for the purpose of sale or for the purpose of consumption otherwise the goods so removed would attract duty and that is not denied by the petitioner itself. But so long as the cones are not removed from the pipeline and they continue so wound on the cones transferred to the warp beams and thereafter sent in for the process of weaving, it is difficult to see how there can be said to be a removal of the goods within the meaning of the Act. and the Rules. Ws are, therefore, of opinion that the contention of the petitioners is well founded and that no duty is payable on the yarn produced, by the assessee in its spinning and weaving mill and which is utilised for the purpose of weaving the fabric manufactured by the petitioner company. 7. The above conclusion of ours really renders the alternative contention of Shri Ravinder Narain academic. But, in our opinion, that contention is also clearly well founded. The yarn manufactured by the assessee and wound up on the cones is clearly within the meaning of Tariff Item 18E and indeed this is not denied by the respondents. If, therefore, the first contention of the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of consumption or other manufacture. In the present case, as we have already mentioned, neither the cone yarn nor the sized yarn is removed within the meaning of the Act and the Rules and, therefore, no question of levying duty on either of them could arise. 8. Before we conclude we should refer to a preliminary objection taken by Shri Cbandrashekheran on behalf of the respondents relying on a decision of this court dated 23rd July, 1979 in C.W. 795/79. The objection raised by him is that the Assessing Authorities in this case are located at Kanpur which is outside the territorial jurisdiction of this court and that therefore this court has no jurisdiction to entertain the writ petition in relation to their acts or conduct. We are, however, unable to accept this contention. AS we have mentioned earlier, the petitioner tried his best to pursued the assessing authorities to accept its contentions, one of which was based on, what seems to us to be, the direct authority of this court. The assessing authorities, however, did not accept this contention, but, on the other hand, insisted on charging duty on the sized yarn purporting to follow the advice contained in the letter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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