SPG. & WVG. Mills Ltd. Vs. Commissioner of Central Excise, Jaipur  Insc
43 (31 January 2003)
Hegde & B.P.Singh Santosh Hegde,J.
C.A.Nos.4788/01, 4792/01, 4794/01, 4795/01, 4797/01, 4789/01, 4790/01, 4796/01,
4791/01, 4793/01 & 4798/01) The appellant is a composite unit engaged in
the manufacture of manmade fabric falling under the erstwhile Tariff Head
18-III/18-E/22 and Chapter 55 of the Schedule to the Central Excise Tariff Act,
1985. In the above process, it manufactures single ply yarn which is then used
in doubling or multifolding the same in a continuous process in their factory.
question that arises for consideration in this appeal is whether the appellant
is liable to pay central excise duty on the manufacture of the single ply yarn
or at the stage when the single ply yarn is converted into double ply
yarn/multi fold yarn when the same is cleared from the factory. The stand of
the revenue is that on the manufacture of the single ply yarn the same is exigible
to duty, therefore, the appellant is liable to pay duty at that stage. The
appellant contends that the single ply yarn manufactured by it is not cleared
from its factory but is used in a continuous process in converting the same
into a double or multi fold yarn. Therefore, it is liable to pay duty at the
stage when so finished double or multi fold yarn is cleared from the factory.
The authorities under the Act have negatived the said claim of the appellant
and have demanded the duty to be paid at the stage when single ply yarn is
manufactured by the appellant, obviously because the rate of duty at that stage
on the relevant date was more than what the appellant would have to pay when it
cleared as double or multi fold yarn from its factory.
tribunal in appeal filed by the appellant rejected the said appeal basing its
finding on two judgments of this Court in the case of Bhilwara Spinners Ltd.
vs. Collector of Central Excise, [1996 (82) ELT 442 (SC)] and Collector of
Central Excise, Jaipur vs. Banswara Syntex Ltd. [1996 (88) ELT 645 (SC)]. The
tribunal also held it has been following these judgments in many other
identical cases including that of one of the appellants before it and it found
no reason to differ from its consistent view on this question.
this appeal before us Mr. D.A.Dave, learned senior counsel appearing for the
appellants fairly conceded that the case of the appellant is covered against it
by the above-cited two judgments. He, however, sought to place reliance on
another judgment of this Court in the case of Collector of Central Excise,
Bombay vs. Polyset Corporation [2000 (115) ELT 41 (SC)] and tried to persuade
us to refer this issue to a larger bench contending that in view of the
judgment of this Court in Polyset Corporation (supra) the earlier view of this
Court in the case of Bhilwara (supra) as well as Banswara Syntex (supra)
have carefully gone through the above-cited judgment and find no reason to
agree with the contention of Mr. Dave. Though this court in the case of Polyset
Corporation (supra) following an earlier judgment of this Court in the case of
Wallace Flour Mills Co. Ltd. vs. Collector of Central Excise, Bombay [1989 (44)
ELT 598 (SC)] held "Excise is a duty on manufacture or production. But the
realisation of the duty may be postponed for administrative convenience to the
date of removal of goods from the factory. We are of the opinion that even
though the taxable event is the manufacture or the production of an excisable
article, the duty can be levied and collected at a later date for
administrative convenience." The said principle cannot be applied to the
facts of the case in these appeals.
case of Banswara syntex (supra), a three Judge Bench of this Court dealing with
identical issue as is involved in this appeal held : "A single ply yarn is
first manufactured and thereafter it is doubled or multifolded, depending upon
the type of fabric which is ultimately to be woven. The liability to pay excise
duty would arise on the manufacture of the single ply yarn and not after the
same has been doubled or multifolded.
or multifolding of the same yarn does not bring into existence a new produce
and no duty is leviable at that stage. It is immaterial, in view of Rule 9(1)
of the Central Excise Rules and Section 49 of the Act whether the yarn so
manufactured is captively consumed or is subjected to any other or further
process." In this case, this court also approved the earlier judgment in Bhilwara
Spinners Ltd. and it further held that the decision of this Court in the case
of M/s. J.K.Cotton Spinning & Weaving Mills Ltd. and Anr. vs. Union of India & Ors. (1987 Suppl. SCC 350), on which
Mr. Dave also relied upon, that the observations in the J.K. Cotton Spinning
Case were not at variance with the judgment of this Court in Bhilwara Spinners.
view of the judgments of this Court in the case of Bhilwara and Banswara Syntex
(supra), we are of the opinion that the judgment of the tribunal can not be
faulted. We are also of the opinion that the judgment of this Court in the case
of Polyset Corporation (supra) does not, in any way, conflict with the earlier
two judgments and so far as the law relating to the stage at which single ply
yarn is liable for duty, the judgments of this Court in Bhilwara and Banswara Syntex
(supra) will prevail.
in our opinion, so far as the questions involved in these appeals are
concerned, they are concluded by the judgments of this Court in Bhilwara and Banswara
the tribunal was justified in placing reliance on the same while rejecting the
appeal of the appellants.
the said judgments of this Court in Bhilwara and Banswara (supra), these
appeals are dismissed.