Customs, Excise and Gold Tribunal - Delhi
M/S. Nahar Fibres Ltd. vs Cce, Chandigarh on 29 May, 2001
ORDER
G.R. Sharma
1. The issue in these two appeals is the same, therefore, they are taken up together and are being disposed of by this common order.
2.The issue involved in the case is whether duty is to be collected at the stage of removal of the yarn from the factory.
3. The facts of the cases are that the appellants are engaged in the manufacture of single yarn, multi-folded yarn and doubled yarn. On scrutiny of the records of the assessees, the Departmental Authorities found that the appellants were manufacturing single yarn and were further processing the single yarn into doubled/multi-folded yarn. The Department, therefore alleged that since only doubled/multi-folded yarn was leared from factory, therefore, duty should have been paid on the price at which the Yarn left the factory since duty on the Yarn was advalorem. The assessees were not selling the yarn at the factorygate but were sending it to their depots on consignment basis without paying duty as their contention was that duty, was already paid on the basis of value determined under Rule 6 of Central Excise Valuation Rules as single yarn was being further processed into doubled/multifolded yarn. SCNs were therefore, issued to the assessees asking them to explain as to why differential duty should not be demanded from them. The Asstt. Commissioner after examining various aspects including the explanation under Rule 9 & 49 confirmed the demand. The appellants filed appeals before the Commissioner (Appeals). Id. Commissioner(Appeals) also upheld the orders of the Asstt. Commissioner and hence the appeals before us.
Arguing the case for the assessees Ld. Counsels submitted that the appellants had discharged the duty burden on single yarn stage as according to the Hon'ble Supreme Court in the case of CCV vs Banswara Syntex Ltd. reported in 1996(88) ELT.645 had held that the yarn is fully manufactured when it appears as single yarn at the spindle stage and is leviable to duty at this stage. Ld. Counsel submitted that the appellants had discharged the duty burden in accordance with the requirement of the Apex Court i.e. they had paid duty on the value determined by the Department on the basis of the cost data for single yarn. Ld. Counsel submitted that in terms of the Explanation Note under Rule 9 and 49 of Central Excise Rules it has been provided "For the purpose of this rule, excisable goods produced or cured or manufactured in any place and consumed or utilised as such or after subjection to any process or processes or for the manufacture of any other commodity whether in a continuous process or otherwise, in such place or any premises appurtenant thereto specified by the Commissioner under Sub-rule(1) shall be premises or premises immediately before such consumption or utilisation".
Ld. Counsel submitted that thus the explanation under Rules 9&49, fiction was created whether such consumption was deemed to be removal. Ld. Counsel submitted that in so far as single ply yarn was concerned, removal was complete the movement, it was taken for further processing into doubled/multi-folded yarn. Ld. Counsel submitted that the Apex Court in the case of Banswara Syntex Ltd. cited above had held that the process of doubling/multi-folding is not a process of manufacture. It was also submitted that during the material period, there was an exemption Notification No.26/94-Ce which inter-alia provided that if duty was paid on single ply yarn, not further duty was required to be paid on doubled/multi-folded yarn.
4A. It was argued that notification No.26/94 dt.1.3.94 when amended by notification No.90/94-CE dt.11.4.94 which clearly stated that against S.No.32 for the entry in column No.3, the following entry shall be substituted namely "yarn double or multifolded including cabled yarn (but excluding sewing thread) manufactured out of yarn falling under Chapter 52, 54, 55 of the said schedule on which the appropriate duty of excise under the said schedule or as the case may be additional duty leviable under the Customs Tariff Act, 1975 has already been paid."
It was also argued that notification No.90/94 provided that in case duty on single yarn has been paid, no further duty was payable while clearing doubled/multi-folded yarn. It was also submitted that notification No.71/94 dt.23.3.94 was also issued for providing relief in this type of cases.
4B. It was contended that permission to retain duty paid goods was sought and obtained in terms of Rule 51A.
4C. It was also submitted for the appellant that Chandigarh Collectorate issued Trade Notice No.70/94 dt.7.6.94 clarifying that duty was to be paid at the off spindle stage on single yarn, whereas another Trade Notice 112/94 dt.15.12.94 clarified that detailed records of single yarn produced at spindle stage shall be maintained for accounting and that duty shall be maintained for accounting and that duty shall be paid at the time on normal price of clearance of double/multifolded yarn.p3 4D. It was submitted for the appellants that option was there either to pay duty on single yarn stage and avail exemption under notification No.26/94 as amended or pay duty on doubled/multifolded yarn stage and avail exemption under notification No.121/94 dt. 11.8.94. In support of this contention they cited and relied upon the decisions in the case of Dunbar Mills vs CCE (1989(44)ELT.500 and Rallis Machines Ltd. (1992(85)ELT.232.p3
5. Ld. Counsel also submitted that the arguments adduced by the authorities below are not tenable in-as-much as the duty was paid on single yarn and therefore, valuation was required to be done of single yarn which was captively consumed.He submitted that in the instant case, valuation has been done of the doubled/multi-folded yarn which was not the subject matter of duty. Ld. Counsel also submitted that while calculating the value of the doubled/multi-folded yarn, the Department has not given them the benefit of duty already paid in the cum duty price and duty has been calculated on the cum duty price as against the requirement of Section 4 which specifically provides that duty element shall be deducted from the price charged if it is cum duty price.
Ld. Counsel,therefore, submitted that no duty was payable and therefore prayed that the appeals may be allowed.
6. The Departmental Representatives submitted that i actual practice, goods were removed from the factory in the doubled/multi-folded yarn form. It was submitted be them that it is not single ply yarn which was taken out of the factory but it was the doubled/multi-folded yarn which was cleared from factory and therefore, duty was required to be paid on this yarn. The Departmental Representatives submitted that for the purpose of levy of duty, it is the form of the yarn in which i t is presented to the authorities at the time of actual clearance from the factory. It was submitted by them that undisputed position in the instant cases is that it was dubled/multi-folded yarn which was cleared out of the factory when it was presented for clearance, therefore, it is the form at which duty should have been paid. He submitted that since duty was not paid at this stage, therefore, differential duty has rightly been demanded.
7. Id. DR also submitted that the ratio of the decision of the Apex Court in the case of CCE vs Banswere Syntex Ltd. cited by the appellant is not applicable to the facts of the present case in-as-much as what was provided in that decision was in regard to the RG.I stage. It was submitted that since the facts in the two cases are different, therefore, the ratio is not applicable. It was also submitted by the DR that the decision of the Apex Court pertains to the period when duty was specific and value was not material and therefore, value aspect was not examined by the Apex Court. Looking from this angle also, the ratio of the decision in this case will not be applicable to the facts of the present case. Ld.DR, therefore, submitted that appeals may be rejected.
8. We have heard the rival submissions. We have perused the evidence on record. We have also gone through the case law cited and relied upon by both the sides. We note that in the instant cases,duty has been p aid at the single yarn stage. It is true that duty was payable at the time of actual removal of multi-folded/doubled yarn from the factory. We note that there is an explanation under Rule 9&49 which clarifies the position in regard to removal in-as-much as in the cases before us the goods were captively removed for subjecting them to the process of multi-folding/doubling. The contention of the authorities below is that explanation is only applicable in respect of removal when the different commodity is manufactured. We find that this contention of the Revenue authorities is wrong in-as-much as the goods can be subjected to process where the process does not amount to manufacture. In the instant case single ply yarn was removed for undertaking the further process of doubling/multi-folding, such removal, therefore, is deemed removal in accordance to the fiction created by the Explanation under Rule 9&49 of the Central Excise Rules,44.
9. We find that since the removal is deemed to be removal, therefore duty has correctly been paid on the single ply yarn on the basis of the cost data furnished in respect of the single yarn.In this view of the matter, we find that the question of removal of doubed yarn or multi-folded yarn did not arise in so far as payment of duty is concerned nor was the cost data in respect of doubled ply yarn or multi-folded yarn required. Further, we note that since duty was paid at the single ply yarn stage,no further duty was required to be paid in terms of Notification No.26/94. We also note that there was an option available to the assessee either to pay duty at single yarn stage or doubled/multi-folded yarn stage.
10. The contention of the Revenue that the decision of he Supreme Court in the case of Banswara Syntex Ltd. pertains to the period when duty was specific and therefore, is not applicable when duty was advalorem. We have examined this aspect and we find that this contention is not acceptable in-as-much as the Apex Court had decided that duty is payable the moment single ply yarn appears at the off spindle stage and further that the process of doubling and multi-folding does not amount to manufacture. Thus, we find the Apex Court decision is fully applicable to the facts of the present two cases as there is no specific finding that decision will be applicable only when the rate of duty was specific and not advalorem.
11. Having regard to the above findings and discussions, we do not find any merit in the contention of the Revenue. In the circumstances, the two appeals are allowed. Consequential relief, if any, shall be admissible to the appellants in accordance with law.