JCT LIMITED Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) SINCE the facts and issue involved in this group of appeals are common, the same are being disposed of by a common order. The facts leading to filing of these appeals are, in brief, as under.

(2.) SHRI K.K. Anand, Advocate, the learned Counsel for the appellant, pleaded that the duty demand in this case is on cotton spun yarn or spun yarn of manmade fibre, manufactured in the factory of the appellant and cleared for captive consumption and also on the duty paid spun yarn of manmade fibre purchased from outside and subjected to winding and doubling/multifolding prior to being used for weaving, that the duty has been demanded on the cost of winding and doubling/multifolding of the yarn prior to being used for weaving of fabrics, that in respect of the spun yarn manufactured in the factory, there is no dispute that its RG -1 stage i.e. the stage at which the quantity of the yarn manufactured is required to be recorded in the RG -1 register, is the spindle stage, that while during the period prior to 16 -3 -1995 Chapter Note 1 to Chapter 52 provided that in relation to the products of Headings 52.03 and 52.04 winding, beaming, warping, reeling or sizing or anyone or more of these processes or conversion of one form of the said product into another form of such product shall amount to manufacture and that the duty on the sized yarn shall be charged on the basis of its weight before sizing, during period w.e.f. 16 -3 -1995, the above Chapter Note 1 of Chapter 52 was replaced by a new note which provides that in relation to the products of Headings 52.04, 52.05 and 52.06, the process of dyeing, printing, bleaching, mercerizing, twisting, texturising, doubling/multifolding, cabling or any other process or anyone or more of these processes or conversion of one form of the said product into another form of the said product shall amount to manufacture, that in view of this, w.e.f. 16 -3 -1995 the process of winding, sizing, beaming, warping, or reeling of cotton yarn did not amount to manufacture and hence there is no question of adding the value of winding w.e.f. 16 -3 -1995, that there was similar Chapter note in Chapter 55 in respect of spun yarn of man -made fibre, that the Apex Court in the case of CCE, Jaipur v. Banswara Syntex Ltd. reported in : 1996 (88) E.L.T. 645 (S.C.) has held that doubling or multifolding of yarn does not bring into existence a new excisable product and, as such, does not amount to manufacture, that same view has been taken by the Apex Court in the case of J.K. Spinning and Weaving Mills Ltd. v. Union of India reported in : 1987 (32) E.L.T. 234 (S.C.) and CCE, Mumbai -V v. Swastik Rayon Processors reported in, 2007 (209) E.L.T. 163 (S.C.), that in view of this, the Commissioner's order confirming duty demand by loading the value of the yarn at the spindle stage with the value of doubling/multifolding yarn prior to its use in weaving is not sustainable, that in terms of exemption Notification No. 35/1995 -C.E., dated 16 -3 -1995, doubled/multifolded yarn including cabled yarn, other than sewing thread falling under Chapter 51, 52, 54 or 55 was fully exempt from duty if such yarn is meant for use in the manufacture of fabrics and the same is made out of the duty paid single ply yarn, that there are similar exemptions for the subsequent period also, that in view of this, the duty demand on the value of doubled or multifold -ed yarn by including the value of these processes in the value of the yarn at the spindle stage is not sustainable, as it is not disputed that the doubled/multifolded yarn had been made out of duty paid single ply yarn and the same had been used for manufacture of fabrics, that during the period of dispute, the assessments were provisional and the same had not been finalized and, therefore, neither any show cause notice could have been issued for demand of duty on the spun yarn on the spindle stage nor these show cause notices could have been adjudicated by the Commissioner/Assistant Commissioner when the provisional assessment had not been finalized and that in view of the above submissions, the impugned orders passed by the Commissioner, Central Excise and Commissioner, Central Excise (Appeals) are not sustainable.

(3.) WE have carefully considered the submissions from both the sides and perused the records.