ORDER B.P. Jeevan Reddy and B.L. Hansaria, JJ.
1. This appeal is preferred under Section 35L(b) of the Central Excise Act. The appellant, Bhilwara Spinners Ltd. is engaged in the manufacture of fabrics. For that purpose it manufactures yarn. It is stated that the appellant manufactures four types of yarn, viz., cellulosic spun yarn, cotton yarn, woollen yarn, acrylic yarn and non-cellulosic spun yarn. These four (sic five) types of yarn are dutiable under Tariff Items 18III, 18A, 18B and 18E of the Schedule to the Central Excise Act as obtaining at the relevant time. The yarn when produced is 'single yarn'. The appellant doubles and multifolds the yarn as a step towards manufacture of fabric. The appellant's case is that it has been paying duty on the doubled/multifolded yarn but not on single yarn.
2. On 18-8-1982, the Assistant Collector (Excise) issued a notice calling upon the appellant to show cause why duty be not levied on the single yarn inasmuch as the yarn at its single stage is a fully manufactured commodity, attracting Central Excise duty. The appellant submitted its explanation stating that both single stage yarn and doubled/multifolded yarn are one and the same goods and inasmuch as it is paying duty on the doubled/multifolded yarn, no duty is payable on the single yarn. This explanation was rejected by the Assistant Collector by his order dated 10-12-1988. The operative portion of his order reads thus :
The explanation added to Rules 9 and 49 very clearly shows that it is not necessary for the purpose of removal or utilisation that a new or different item should come into existence.
There is no doubt about the fact that the excise duty is leviable on product as soon as it is completely manufactured and in the present case the yarn is a fully manufactured product when it is at the spindle stage and this fact has also been admitted by the party in his reply to show-cause notice as well as at the time of the personal hearing. The multifolding of yarn is done only to facilitate the weaving of the cloth and this is therefore, a further step towards weaving.
3. On appeal, the Appellate Collector agreed with the appellant whereupon the Revenue went up in appeal to the Tribunal. The Tribunal allowed the appeal following its decision in similar matters. The Tribunal inter alia observed that it is an admitted fact that yarn is fully manufactured product when it is at the spindle stage and that multifolding is done only to facilitate weaving of cloth and it is, therefore, a further step towards manufacture of cloth.
4. In this appeal, it is contended by Sri Dave, learned Counsel for the appellant that inasmuch as the appellant is paying duty upon the doubled yarn and because doubled yarn and single yarn are one and the same goods, no duty ought to be levied upon the single yarn. He submits that single yarn is obtained at an intermediate stage of the manufacture/production of fabrics and that it is a continuous process wherein single stage yarn is doubled/multifolded and then consumed in manufacture of fabrics. He relies upon certain observations in the decision of this Court in J.K. Cotton Spg. & Wvg. Mills Ltd. v. Union of India 1987 Supp SCC 350, in support of his submission.
5. It has been found by all the three authorities that single stage yarn is a fully manufactured product. It is, therefore, excisable. The fact that it is used in the manufacture of fabrics in a continuous process makes no difference to its suitability. This aspect is made explicit by the explanations appended to Rule 9 and Rule 49 by Notification No. 28/1982, dated 20-2-1982. Now so far as the dutiability of the doubled/multifolded yarn is concerned, Shri Dave relies upon the observations in the orders of the authorities below to contend that single yarn and doubled/multifolded yarn are one and the same goods and hence duty cannot be levied twice on the same goods. On the other hand, Shri Vellapally, learned counsel for the respondent, submits that the said question was never in issue in these proceedings and, therefore, certain passing observations made in the orders of the authorities cannot be treated as a finding to the effect that single yarn and doubled/multifolded yarn are one and the same goods. He submits they are not. He relies upon the decision of this Court in Aditya Mills Ltd. v. Union of India .
6. We are concerned in this case with the only question whether single yarn attracts duty or not. In view of the finding of the Tribunal affirming the finding of the Assistant Collector that single yarn is a completely manufactured product, it cannot be disputed that it attracts duty. We are not concerned with the question whether the doubling/multifolding of the said yarn results in different goods or not and whether duty is leviable on doubled/multifolded yarn. We need only say that the Tribunal is right in its opinion that the single yarn is subject to duty though used in the manufacture of fabrics in a continuous process of manufacture.
7. The appeal is accordingly dismissed. No costs.