K. Shivashankar Bhat

( 1 ) THE only prayer that survives for consideration pertains to the taxability of the material called "sliver" obtained as an inprocess material in the manufacture of semi-worsted carpet yarn, in the factory of the petitioner company; the action taken by the Revenue to levy excise duty on this material under the provisions of the Central Excise and Salt Act, 1944 (the act ) is under challenge. At the time of filing the writ petition, validity of a few statutory provisions was raised, but, these provisions have been upheld in other cases.

( 2 ) THE basic question is whether this material referred as sliver is of a transient character which comes into existence during the manufacture of the semi worsted carpet yarn; in other words, whether this inprocess material, captively consumed, has actually an individual identity having a market, so that it can be considered as goods to attract the levy of excise duty.

( 3 ) THE petitioner-company in para 2 of the writ petition averred thus:-

"the petitioner company manufacturers, inter alia, woollen yarn from raw-wool. This woollen yarn is of the grade which is only fit for Carpet making. In the process of manufacture of the end product woollen yarn from the raw material raw-wool, the raw- wool is processed and this processed raw wool obtained in the form of sliver is then spun into yarn within the continuous process in the same factory. sliver is only an in-process material. There is no removal of this sliver from the factory and it is not capable of being removed from the factory. This sliver is non- cohesive and is a brittle web of wool consisting of a collection of loosely held wood fibres. . It has no cohesive property and cannot stick together and remains in a very loose from. It is very brittle in nature and is liable to fall part by handling. It also gets entangled if it is not handled gently thereby becoming unsuitable for spinning. As such, this sliver is not marketable and is not marketed. "again in para 10 and 11 it is averred:

(A) The petitioner No. 1 manufactures woolen yarn which is the end product made from raw-wool. The raw-wool is purchased by petitioner No. 1 from various Wool-Centres in India like Jamnagar (Gujarat, Bikaner (Rajasthan) and Panipat (Haryana) etc. (b) This wool in its raw form is out from the back of the sheet. It is greasy in nature and contains large amount of impurities in the form of dirt, wax, vegetable matters etc. After the wool is purchased and brought into the factory, wool is opened in a cleaning machine and loose dirt and some vegetable matter is removed. Once the Wool is opened, it is cleaned and washed by the use of water, steam and detergents. The wool is washed and the impurities are removed. (c) The washed wool is then dried by passing the wool through drying chamber which contains heating devices. The wool is partially dried so that only about 14% of the moisture remains. After the wool is dried, the wool is then removed and opened in a machine called the preparatory willow. This machine separates the wool fibres and further removes the dirt and vegetable matter which may have remained in it. Thereafter, the wool may be dyed if so required. (d) Thereafter different types of wool are blended with an applicable of emulsion oil fro the purposes of smooth processing. The mixing of oil also makes the wool softer and makes processing possible. However, this oil evaporates in the process. (e) At this stage, the wool is conveyed to the spinning department in the factory. Here, the humid condition of 65% (+2%) is maintained. This humid condition is essential for processing. The wool after maturing is then put on to a carding miachine. This carding machine consists of cylindrical speed rollers which have pins mounted on their surface. The rolling of the wool on the cylindrical rollers, with pins straightens the fibres and opens the wool. This web of wool emerging from these rollers is pulled by a drawing head. T

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