IMPORTANT POINT
The yarn manufactured by appellant is only Taspa yarn/fancy yarn and is classifiable and is chargeable to duty under Chapter Heading No. 56.06 of the Central Excise Tariff.

Headnote:Central Excise and Salt Act, 1944 -Section 6-Central Excise Rules, 1944-Rule 174-Demand of duty of Central Excise and Penalty- Taspa yarn manufactured by the appellant-Whether covered by Chapter Heading No. 56.06 of Central Excise Tariff as held by Revenue Authorities or under Chapters 50 to 55 as stated by appellants (The former)-Appeal dismissed.
       Held : We have carefully perused both the orders under appeal. In our opinion, the Commissioner and the Tribunal have rightly decided that the sample appears to satisfy the requirements of definition of Fancy Yarn as given in the standard technical literature and appears to be covered under Heading No. 56.06 as `special yarn of Central Excise Tariff. (Para 14)
       Held also : We have perused the reply submitted by the appellant to the show cause notice to the Collector of Central Excise and Customs, Baroda. In our opinion, the reply submitted by them is not satisfactory. (Para 17)
       Held thereafter : It is, therefore, seen that as per the admission of the appellant, the yarn manufactured by them is special yarn falling under Heading No. 56.06 and hence the notifications mentioned by them are not applicable in this case. They also failed to pay excise duty though they were required to pay duty and hence the action initiated by the preventive wing is correct. It is very clear from the findings of the adjudicating authority as well as the appellate authority that the yarn in question consists of core yarn and hence in view of the above clarification, the said yarn is correctly classifiable under Heading No. 56.06. The contention of the appellant that they had carried out doubling of yarn on simple crimping machine and hence fall under Chapters 50 to 55 is not correct and not acceptable inasmuch as the partner of the said firm in his statement had specifically stated that for manufacture of the said yarn they had used special attachment known as Tensor and Ceramic guide which are not required for simple crimping of single yarn and they also stated that the yarn under reference are manufactured in such a manner that out of the two yarns, one yarn acts as a base and the other acts as a covering yarn. Therefore, the process in the particular case is bound to produce a special effect yarn. The Collector of Central Excise, in our opinion, has correctly passed the order in original dated 29-3-1990 after discussing the issue at length and after considering all the arguments put forth by the notices including the relevant trade notices and also the Chemical Examiners report. Likewise, the Tribunal also, after giving careful consideration to the submissions made by both the sides, did not find any merit in the rectification application and thus had correctly rejected the same. The Full Bench decision of the Tribunal wherein the decision taken in the case of Pratik Crimpers (supra) will not be applicable to the instant case inasmuch as it was specifically discussed in the order rejecting ROM by the Central Excise and Gold (Control) Appellate Tribunal that in view of the process of manufacture there is a core yarn in the yarn in question and hence the same is classifiable under Heading No. 56.06 and is liable to duty. For the foregoing discussion, we are of the view that the yarn manufactured by the appellant is only Taspa yarn/fancy yarn and is classifiable and chargeable to duty under Chapter Heading No. 56.06 of the Central Excise Tariff and, therefore, the appellant is liable to pay duty in contravention of Rule 174 read with Section 6 etc. of the Central Excise and Salt Act, 1944. We do not find any error of law or any perversity in the reasoning adopted by the Commissioner or by the Tribunal on the facts of these cases. On the contrary, in our view, the decision of the Commissioner and the Tribunal are well sustained on the evidence on record and calls for no interference in these appeals moved by the appellant. We, therefore, confirm the orders passed by the Commissioner as confirmed by the Central Excise and Gold (Control) Appellate Tribunal and reject these appeals. The appeals are dismissed. However, in the facts and circumstances of the case, we order no costs. (Paras 18, 19, 20 & 21)

JUDGMENT

A.R. Lakshmanan, J.-The appellant-firm filed these appeals challenging, inter alia, the judgment and order dated 25-2-2000 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi being Miscellaneous Order No. M/12/2000-D in E/ROM/125/99-D in Application No. E/2618/90-D and final order No. 487/98-D dated 15-6-1998 in Appeal No. E/2618/ 1990-D, whereby the Tribunal has held that Taspa yarn manufactured by the appellant was covered under Heading No. 56.06 of the Central Excise Tariff and, therefore, confirmed the demand of duty of central excise of Rs. 5,63,0 66.40 and penalty of Rs. 50,000/-. The facts of the case in brief are as follows:-

2. The appellant-firm was issued a licence under the Central Excise Act, 1944 for carrying out the processing work of yarn. According to the appellant, since 22-5-1986, the doubled and/or multifolded yarns falling under Chapter 54 or Chapter 55 of the Schedule to the Central Excise Tariff Act, 1985 were wholly exempted from the duty of excise leviable thereon, provided such doubled or multifolded yarns were manufactured out of yarn falling under Chapter 54 or Chapter 55 of the said Schedule on which appropriate duty of excise had already been paid. Relying upon the aforesaid notifications, the appellant did not pay any duty of excise on the same and neither did it recover such duty of excise from its customers. The Collector of Central Excise issued a show cause notice dated 15-7-1988 to the appellant-firm calling upon the appellant to show cause as to why duty of excise amounting to Rs. 5,63,066.40 be not recovered on the goods, i.e. Taspa yarn/fancy yarn falling under erstwhile tariff item No. 62 with effect from 1-3-1986 and under Chapter/tariff sub-heading 56.06 and penalty be not imposed on them under Rule 173-Q of the Central Excise Rules, 1944. A reply was sent to the show cause notice that the appellant categorically averred that it bona fidely believed that the doubled filament yarn was exempted from payment of duty of Central Excise and there was no international contravention of Rule 173 of the Central Excise Rules, 1944.

3. The appellant-firm further stated that it was engaged in the business of processing yarns such as crimping, texturising, doubling multifolding etc. and that the firm had carried out doubling of yarn on a simple crimping machine and that the simple process of doubling of yarn on crimping machine was covered under Notification M.F. (C.D.R.) I. No. 114/18/86 CX 3 dated 18.4.1986.

4. The Collector of Central Excise, Vadodara passed an order on 29-3-1990 confirming the demand of duty of Central Excise amounting to Rs. 5,63,066.40 for the period from February, 1986 to September 30, 1987 and also imposed a penalty of Rs. 2 lakhs on the appellant.

5. Being aggrieved, the appellant filed an appeal before the Central Excise and Gold (Control) Appellate Tribunal, New Delhi. The Tribunal vide its judgment and order dated 15-6-1998 rejected the appeal of the appellant. The Tribunal while rejecting the appeal relied upon its earlier judgment and order in the case of Dhamwala Silk Mills Surat Pvt. Ltd. vs. Commissioner of Central Excise, Vadodara, (1997) 73 ECR 383. Since the impugned judgment of the Tribunal suffered from error apparent on the face of the record, the appellant filed a Miscellaneous Application for rectification of mistake, being Application No. E/ROM/ 125/99-D and pointed out that the facts of the appellant were closely comparable to the facts of Pratik Crimpers vs. Collector of Central Excise, Mumbai, 1998 (101) E.L.T. 437, the latter judgment of the Tribunal particularly, with regard to yarn being run parallel, the manufacturing process being common and the machineries being the same.

6. The Tribunal rejected the application for rectification of mistake vide judgment and order dated 25-2-2000 and held that Taspa yarn manufactured by the appellant was covered under Heading No. 56.06 of the Central Excise Tariff and, therefore

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2003 Supreme(SC) 333

IMPORTANT POINTThe yarn manufactured by appellant is only Taspa yarn/fancy yarn and is classifiable and is chargeable to duty under Chapter Heading No. 56.06 of the Central Excise Tariff.

Cases Referred (4)

IMPORTANT POINT
The yarn manufactured by appellant is only Taspa yarn/fancy yarn and is classifiable and is chargeable to duty under Chapter Heading No. 56.06 of the Central Excise Tariff.