Full Judgment Text
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CASE NO.:
Appeal (civil) 2170 of 2001
PETITIONER:
M/s.Rajasthan Spg. & Wvg. Mills Ltd.
RESPONDENT:
Commissioner of Central Excise, Jaipur.
DATE OF JUDGMENT: 31/01/2003
BENCH:
N.Santosh Hegde & B.P.Singh
JUDGMENT:
J U D G M E N T
SANTOSH HEGDE,J.
(With 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.
The 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.
The 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.
In 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
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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) requires reconsideration.
We 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.
In the 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.
Doubling 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.
In 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.
Thus, 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 (supra).
Therefore, the tribunal was justified in placing reliance on the
same while rejecting the appeal of the appellants.
Following the said judgments of this Court in Bhilwara
and Banswara (supra), these appeals are dismissed.
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