BHILWARA SPINNERS LIMITED Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(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 yrn. These four (sic five) types of yarn are dutiable under Tariff Items 18-111, 18-A, 18-B and 18-E of the Schedule to the central Excise Act as obtaining at the relevant time. The yarn when produced is 'single yam'. 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 yarninasmuch 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:

(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.