2004 (96) ECC 492 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(C)

Shri V.K. Agrawal, Member (T) and Shri M.P. Bohra, Member (J)

Hindon River Mills

Versus

CCE, Ghaziabad

Appeal No. E/1183/2003-NB(C)

[Arising out of Order-in-Appeal No. 96/CE/GZB/2003 dated 4.3.2003 passed by the Commissioner of Central Excise (Appeals), Ghaziabad]

Final Order No. 271/2004-NB(C), dt. 17.3.2004, Certified on 6.4.2004

Marketability

Yarn -- Captively consumed in the manufacture of fabrics -- Not disputed by Appellants that yarn is capable of being marketed once it is in the form of cones -- Cone is nothing but a form of packing which cannot decide the marketability of the yarn -- Marketability only means saleable or suitable for sale, it need not be in fact marketed -- The article should be capable of being sold to consumers in the market as it is -- There is nothing to indicate that the yarn is not saleable or suitable for sale.

Appeal rejected.

PRESENT :

Shri S.C. Kamra, Adv. for the appellant.

Shri Kumar Santosh, SDR for the respondent.

Cases Cited :

1. A.P. State Electricity Board v. CCE, Hyderabad, 1994 (48) ECC 59 (SC)............ [Para 3]

2. Bhilwara Spinners v. CCE, 1996 (82) ELT 442 (SC)................................... [Paras 3 & 4]

3. Indian Cable Co. v. CCE, Calcutta, 1994 (48) ECC 121 (SC)............................. [Para 4]

Per : V.K. Agrawal

The issue involved in this appeal, filed by M/s. Hindon River Mills, is whether the Yarn captively consumed by them for the manufacture of fabrics is capable of being marketed.

2. Shri S.C. Kamra, learned Advocate, submitted that the Appellants, a composite textile mill, are engaged in spinning, weaving, and processing of different types of yarns and fabrics; that after the decision of the Delhi High Court in the case of J.K. Cotton & Spg. Mills Co. Ltd. v. UOI to the effect that yarn obtained and further processed within the factory for manufacture of fabrics would not be subjected to Excise duty the Appellants also claimed that the Central Excise duty is not payable on yarn as the same was not removed from their factory premises; that as the department was not allowing them the benefit of the decision of Delhi High Court in J.K. Cotton Spinning & Weaving Mills Co. Ltd. they also filed a writ petition and obtained an interim order for payment of nil rate of duty on yarn manufactured and used inside their factory premises in the manufacture of fabrics; that the interim order was subsequently vacated by an order dated 14.5.85; that the High Court vide Final Order dated 25.5.99 has disposed of their writ petition by remanding the matter to the assessing authority to finally adjudicate if the goods are exigible to excise duty, particularly keeping in view the question of marketability. He, further, mentioned that both Dy. Commissioner and the Commissioner (Appeals) have decided the matter against them and hence the present appeal. He submitted that the yarn manufactured by them is not marketable as such without winding it on a package called as paper cone which is taper in size, through roto coning process; that marketable yarn on bobbins at ring frame stage is taken to cone winding machine, where the yarn is wound on paper cone; that the yarn is marketed in the form of cones only; that Northern Indian Textile Research Association has opined in their letter dated 26.5.03 that single yarn on cheese is meant only for internal consumption which is not ordinarily bought and hold in the market and the yarn sold in the market is generally wound on cone/hanks. The learned Advocate, therefore, submitted that yarn used by them is thus no marketable and as such not duty is leviable.

3. Countering the arguments Shri Kumar Santosh, learned SDR, submitted that the basis for treating the yarn as non-marketable by the Appellants is that it is not wound on cones as for captive consumption it is wound only on cheese; that it means as far as quality, body, texture, appearance and other properties are concerned both types of the yarn are the same; that the difference is only of packing otherwise both the yarns could be used for weaving; that the packing does not make the yarn non-marketable as in the case of captive consumption it is not required to wound the yarn on paper cones. He relied upon the decision in the case of A.P. State Electricity Board v. CCE, Hyderabad, 1994 (48) ECC 59 (SC) : 1994 (70) ELT 3 (SC) wherein it has been held that "the marketability is thus essentially a question of fact to be decided in the facts of each case. There can be no generalization. The fact that the goods are, in fact, not marketed is of no relevance. So long as the goods are marketable they are goods for the purpose of Section 3. It is also not necessary that the goods in question should be generally available in the market." Reliance has also been placed on the decision in the case of Bhilwara Spinners v. CCE, 1996 (82) ELT 442 (SC) wherein it has been held that single yarn is a completely manufactured product and it cannot be disputed that it attracts duty.

4. We have considered the submissions of both the sides. It has not been disputed by the Appellants that the yarn is capable of being marketed once it is in the form of cones. The cone is nothing but a form of packing which cannot decide the marketability of the yarn. The Appellants are using the yarn in their factory after being wound on cheeses. It is not the case of the Appellants that yarn wounded on cheese does not have any shelf life or it is not capable of being brought to the market for being sold and purchased. The learned SDR has relied upon the decision in the case of Bhilwara Spinning Ltd. wherein the Apex Court has fairly held that single yarn is completely manufactured product attracts Central Excise duty though it is used in the manufacture of fabrics in a continuous process of manufacture. The learned Advocate has relied upon the opinion tendered by the Northern India Textile Research said Association. A perusal of the said opinion reveals that the Association has nowhere opined that the yarn is not marketable. It has only opined that "yarn is not ordinarily bought and sold in the form of cheese." Thus the opinion tendered by the Association does not advance the case of the Appellants at all. It has been held by the Supreme Court in the case of Indian Cable Co. v. CCE, Calcutta, 1994 (48) ECC 121 (SC) : 1994 (74) ELT 22 (SC) that "the word marketability only means saleable or suitable for sale, it need not be in fact marketed. The article should be capable of being sold to consumers in the market as it is -- without anything more. There is nothing to indicate that the yarn is not saleable or suitable for sale. According we do not find any reason to interfere with the impugned Order. The appeal is thus rejected.

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