MADURA COATS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants have challenged the Order -in -Original No. 41/92, dated 14 -12 -92 passed by the Commissioner of Central Excise, Madurai confirming the duty demand and imposing penalty on the Polyester Sewing Thread manufactured and cleared by them out of Filament Yarn falling under Chapter 54 of the Central Excise Tariff Act, 1985. The Revenue has proceeded on the ground that the filament yarn has not suffered duty and what has suffered is the additional duty paid under the Customs Act which cannot be considered as CVD in terms of Apex Court's judgment rendered in the case of Khandelwal Metal & Engineering Works and Anr. Etc. v. Union of India - 1985 (20) E.L.T. 222 (S.C.) = 1995 ECR 2571.

(2.) IT was argued by the appellants' Vice President, Shri S.S. Thakur that in the first instant, the imported yarn is single yarn which was used for manufacture of double yarn and such a process of manufacture of double yarn does not amount to a process of manufacture as has been held by this Bench in their own case reported in 2000 (124) E.L.T. 274 (T) which has followed the Larger Bench judgment of this Tribunal rendered in the case of CCE v. Jaipur Polyspin Ltd. -1996 (85) E.L.T. 299. He submits that judgment CCE v. Jaipur Polyspin Ltd. has followed the earlier judgment of the Tribunal rendered in the case of Collector v. Banswara Syntex Ltd. - 1992 (62) E.L.T. 658. He submits that Revenue's appeal filed before the Apex Court in the case of CCE v. Banswara Syntex Ltd., was rejected by the Apex Court as reported in 1996 (88) E.L.T. 645 and, therefore, doubling of single yarn does not amount to a process of manufacture. He further referred to the show cause notice wherein there was admission made by the Revenue that the imported yarn has suffered additional duty and such additional duty is nothing but Countervailing Duty and Excise Duty as held by the Larger Bench of the Apex Court in the case of Hyderabad Industries Ltd. v. UOI - 1999 (108) E.L.T. 321 (S.C.). He pointed out that the Larger Bench of the Apex Court in the case of Hyderabad Industries Ltd. has differed with the ruling rendered in the Khandelwal Metal & Engg. Works v. UOI (supra) which took a contra view that additional duty of customs and CVD are different. It is his submission that once the yarn has suffered additional duty which is nothing but Excise Duty, therefore, even from the Revenue's point of view, then existing exemption notification is available. He points out that the doubling of yarn amounting to manufacture was introduced by chapter note subsequent to the period in question and therefore the Tribunal even in such circumstances where the note was applicable held that demands are hit by time -bar as rendered in the case of Ridhi Sidhi Yarn P. Ltd. v. CCE, Jaipur - 2002 (52) RLT 1037 (CEGAT - Del.). Therefore, even otherwise the demands are barred by time and are not enforceable.

(3.) LD . SDR relied on the findings given by the Commissioner in the impugned order and stated that what was paid by the appellants was additional duty under the Customs Act and they having manufactured the item in the country are required to pay excise duty and hence excise duty not having been paid, the benefit of the notification in question which is for a mulfi -fold yarn is not available. She reiterates the Commissioner's view.