Case Law Details
Hada Textiles Industries Limited Vs Commissioner of Central Excise & Service Tax (CESTAT Kolkata)
Department had demanded duty on the cotton yarn in view of the Chapter Note I to Chapter 52 of CETA, 1985 on the ground that products covered under Heading No.52.03, sizing, beaming, warping, winding or reeling or any one or more of these processes for conversion of any form of the said products into another form of such product amounted to manufacture and on the ground that since the stage in which it was actually removed by the said assessee i.e. straight reel hank cotton yarn exempted from duty of excise, therefore the duty was not leviable since final product is exempted vide Notification No.187/83 dated 09.07.1983. Undisputedly Cotton Yarn in straight reel hank falling under heading NO.52.03 of the Schedule to the Central Excise Tariff Act, 1985 was exempted from payment of Central Excise duty. There is also no dispute in the present case that the Appellants had cleared the cotton yarn in straight reel hank and prima facie we find that their case is covered by the judgment of this Tribunal in the case of Arati Cotton Mills v. Commissioner of C.Ex., Calcutta-II [2001 (130) E.L.T. 191 (Tri.-Kolkata)], wherein the Tribunal held as under:-
5. A reading of the above para of Commissioner (Appeals) order shows that strong reliance has been placed by him on Chapter Note 1 of the Chapter 52 of the Central Excise Tariff Act, 1985. We find that identical definition of manufacture was there in the erstwhile Tariff Item under Section 2(f)(iv), which was referred to by the Revenue before the Tribunal in the case of Orissa Cotton Mills and in the case of Orissa Weavers Cooperative Spinning Mills relied upon by the ld. consultant. In para 5 of Orissa Weavers’ Judgment it was observed by the Bench as under :-
5. We have carefully considered the matter. We observe from Rule 9, read with Rule 49, that the charge of duty arises when excisable goods are sought to be removed from the manufacturing premises “for consumption, export or manufacture of any other commodity in or outside such place”. The Department’s point is that removal of cotton yarn on cones for conversion into doubled yarn hanks amounts to removal for manufacture of another commodity and hence the respondents are required to pay the duty at the time of removal of cones. We do not agree with the Department. As made clear in Explanation (2) below item 18A, bobbins, cones and hanks are all various ‘forms’ of the same commodity namely cotton yarn. It is further made clear in Explanation II below Item 18-III, made applicable to Item 18A by virtue of Explanation (3) thereunder, that “cotton yarn” includes both single yarn as well as multiple fold yarn shall be determined for the purpose of Tariff Item 18 as well as 18A. In fact, single yarn and multiple fold yarn or doubled yarn are only two different varieties of cotton yarn. They are not different commodities either in the Central Excise Tariff or commercially. The stages of bobbins, cones/cheeses, doubling bobbins and hanks in the respondents ’ factory are stages in the manufacture of cotton yarn in the final multiple fold yarn in plain (straight) reel hanks and it is only in this final form that cotton yarn is removed out of their factory. We, therefore, agree with the Collector (Appeals) that all through cotton yarn remains only cotton yarn at different stages of its conversion till it reaches the final form in hanks and there is no transformation from one commodity to another. The charge of duty under Rules 9 and 49 cannot arise since at the bobbins or cone stage there is no removal either for consumption or for export or for manufacture of some other commodity.”
6. As such it is seen that no new definition of manufacture is introduced in the new tariff. The identical definition which was already in existence under Section 2(f) was considered by the Bench and it was held that conversion of one stage of yarn into another will not amount to manufacture. It is also seen that hank yarn is obtained as a result of continuous process of manufacture in which the winding of bobbin is only an intermediary process. As such we do not find any reasons to take a different view than the one taken by the Tribunal In the earlier decisions. Accordingly we set aside the impugned order and allow the appeal.”
Please become a Premium member. If you are already a Premium member, login here to access the full content.
