ORDER
M. Vasavada, Member (J)
1. As common issues of facts and law are involved in all these appeals, we dispose of all these appeals by this common order.
1A. In Appeal No. E/A. 1804/84-D, the respondents receive duty-paid yarn from their customers for the purpose of doubling/twisting/dipping and after carrying out these processes, yarn was returned to their customers and according to the adjudicating authority (the Assistant Collector), after these processes are carried out, a new product commercially known in the market as ‘Dipped Nylon Tyre Yarn’ emerges. The appellant contends that even after the processes, yarn remains yarn for all purposes. The Assistant Collector has held in his findings that a different product, known in the market by distinct constitution, use and marketability emerges and is, therefore, correctly classifiable under T.I. 68.
2. In Appeal No. E1807/84-D, the respondents received yarn from their customers and they carried out triple twisting of fibre yarn as under :
“50 s Grey Yarn Terene/Polyester with 120 Denier-Viscose
50 s 100% Polyester with 120 Denier Rayon Yarn.
40 s 52/48 Viscose/Polyester yarn with 120 Denier Viscose Yarn.”
3. The Assistant Collector has held that the product, that finally emerges, is known in the market parlance as T.T.F. yarn and it is different from the constituent yarn and is classifiable under T.I. 68.
4. In Appeal No. E.1809/84-D, the respondents were doubling rayon filament yarn with non-cellulosic spun yarn and according to the Assistant Collector, the twisted yarn is classifiable under T.I. 68. These respondents are also doing process work only.
5. In Appeal No. E1832/84-D, the respondents received yarn from outside parties for making it into multiply yarn ranging from 4 ply upto 25 ply yarn and according to the assessee, it remains yarn, but according to the Assistant Collector such multi-fold yarn twisted together into various strengths are known in the market as nylon/rayon cords and are used for tyre making and not for weaving, sewing or rope making and are, therefore, classifiable under T.I. 68.
6. In Appeal No. E.1837/84-D, the respondent received, from their customers, duty-paid rayon filament yarn and 100% polyester yarn and after doubling it returned to the customers. According to the Assistant Collector, the respondents have admitted, at the time of personal hearing, that the resultant doubled yarn cannot be classified under T.I. 18E and he has held that as a result of such process of doubling, a new yarn, having combination of filament and spun yarn, emerges which is classifiable under T.I. 68.
7. Aggrieved by the order of the jurisdictional Assistant Collector, all these respondents went in appeal and the Collector of Central Excise (Appeals), Bombay, by a common Order-in-Appeal No. M-817-856/BI-249-271/BII-132-145/TH-51-53/84 (whereby he disposed of 40 appeals including appeals preferred by these respondents), allowed the appeals and held that the respondents are doing job work only and they will be liable to pay excise duty in respect of job work carried out by them only.
8. Aggrieved by the said order, the Revenue has preferred these appeals.
9. We heard L.A. Sh. E.P. Bharucha with L.A. Sh. H.N. Vakil for the respondents, Swan Mills Ltd. in Appeal Nos. E. 1804/84-D, E. 1809/84-D, E1832/84-D and E.1837/84-D and Shri R.C. Pahuja representative of the respondent in E.A/No. 1807/84-D, and Shri L.C. Chakravorty, Ld. J.D.R. for the Revenue.
10. The impugned order was a common order whereby 40 appeals (including these five appeals) were disposed of by the Collector (Appeals) and in that order, the Collector (Appeals) has discussed only the various judgments of different High Courts and also has discussed meaning and interpretation of the words ‘manufacture’ and ‘job work’, but he has not discussed tactual aspects of any of the appeals. So, it is not a speaking order. Some other appeals, preferred against the same order, have been remanded back for deciding de novo. But in these appeals, both the sides submitted that the facts can be easily ascertained from the orders-in-original which are on record and so instead of remanding the appeals, the appeals be decided on merits. So, we proceed to decide these appeals on merits.
11. It is admitted that all the respondents are doing job work and they claim benefit under provisions of Notification No. 119/75.
12. Shri Chakravorty, Ld. JDR has contended that the new product with distinct name, character and use emerges as a result of process carried out by the assessees in all these five appeals and so it cannot be said that the respondents return the same article to their customers after carrying out the process described above. So, according to Shri Chakravorty, these respondents are not entitled to avail of the benefits provided under Notification No. 119/75 and so all these appeals must be allowed. He has submitted that the issue whether a new product emerges, is decided in favour of Revenue in Aditya Mills Ltd., Rajasthan v. C.C.E., Jaipur -1983 (14 ) E.L.T. 1853 (CEGAT). In this case, it is held as under :
“The PPRF yarn, obtained as a result of doubling and twisting of two distinct types of yarns falling under two distinct tariff items, namely one rayon filament yarn and the other polyester spun yarn, was a new variety of yarn known to the market, as “fancy yarn”. Since it did not fall under any of the specific categories of Tariff Items 18 to 18F, it was classifiable under residuary Item 68 ibid.”
“Doubling and twisting of yarn is a manufacturing process, falling under Section 2(f) of the Central Excises and Salt Act, 1944.”
13. This case went to the Hon’ble Supreme Court and the Supreme Court in Aditya Mills Ltd. v. Union of India -1988 (37) E.L.T. 471 (S.C.) upheld this order of the CEGAT and held as under :
“Manufacture is complete as soon as by the application of one or more processes, the raw material undergoes some change. If a new substance is brought into existence or a new or different article having a distinct name, character or use results from a particular process or processes, such process would amount to manufacture. The moment there is transformation into a new commodity commercially known as a separate and distinct commodity having its own character and use ‘manufacture’ takes place. In the instant case, the Tribunal has found that indisputably a new yarn has come into being which is known in the market and that PPRF is treated differently from polyester spun yarn and rayon filament yarn. Therefore, the Tribunal came rightly to the conclusion that this is a separate and distinct item.”
14. As against this, L.A. Shri Bharucha for Swan Mills Ltd. contended that twisting of yarn does not result into emergence of a new product, that after the process also yarn remains yarn and identity of 2 or 3 different types of yarns twisted together is not lost. He contended that in National Organic Chemical Industries Ltd., Bombay v. C.C.E., Bombay -1985 (21) E.L.T. 252 (CEGAT), two judgments of Madura Coats Ltd. v. C.C.E. -1980 (6) 582 (Cal.) and another Madura Coats Ltd. – 1982 (10) E.L.T. 370 have been referred to and have been relied upon. In both these cases, the facts were identical and it has been held therein that while carrying out the process of twisting the material thereby underwent the change in physical form but was still identifiable with the articles supplied by the customers and so the assessees were entitled to avail of the benefit under Notification in question. But in Madura Coats Ltd. (supra), there was, further observation, which is as under :
“If during the manufacturing process, the materials supplied by the 3rd respondent lose their identity and the product that is handed over to the supplier is entirely different in which the articles supplied cannot be identified, the concession contemplated in the Notification would not be available.”
15. Shri Bharucha, further, submitted that the SLP preferred against the judgment of the Calcutta High Court in Madura Coats Ltd. -1980 (10) E.L.T. 582 (Cal.) was dismissed. So the said judgment is confirmed by the Hon’ble Supreme Court and is binding to this Tribunal. The process undertaken by the respondents (Swan Mills Ltd.) is identical with the process undertaken by the assessee in Madura Coats Ltd. and so the respondents in these appeals should also be held eligible to claim benefits under Notification 119/75.
16. Now in the case of Madura Coats Ltd. (supra), the assessees were making warp sheets out of nylon or rayon yarn supplied to them by their customers. The process comprised of holding of the yarn in parallel rows with cotton yarn used as weft at sufficiently wide intervals. The High Court has held as under :
“In the instant case, as has been discussed by us, the nylon or rayon warp sheets do not appear to be a new article as a result of the nylon or rayon yarns being arranged lengthwise and held together by cotton yarn placed horizontally at widely spaced intervals. A very look at the warp sheet will give one the impression that it is nylon or rayon and nothing else. So even if the warp sheets are bought and sold in the market as nylon or rayon tyre cord warp sheets, they do not cease to be nylon or rayon yarns. In other words, the nylon or rayon yarns are not transformed into a new substance having a distinctive character.”
17. Now, in these appeals, the respondents are doing the process of doubling/twisting of different types of yarn (in Appeal No. E1807/84D, the respondents are twisting triple yarns of different varieties and in Appeal No. E/1804/84-D, the respondents are doing process of dipping also). Now, in case of Aditya Mills Ltd. (supra), the Hon’ble Supreme Court has specifically held that such twisting results into emergence of different products. So submission of Sh. Bharucha, L.A. that judgment of Hon’ble Supreme Court is binding to this Tribunal is quite right but here there is specific judgment of the said court on this very point and we have to follow that judgment. So, in all these cases, in the light of the judgment in Aditya Mills case (supra), a new product with distinct name, character and use emerges as a result of process carried out by the respondents, as rightly held by the adjudicating officers in their Orders-in-Original. In view of this, the impugned order is bad in law and requires to be set aside. It is also contended by L.A., Sh. Bharucha that Madura Coats (supra) has been followed by this Tribunal in National Organic Chemical Industries Ltd., Bombay (supra). So, in these appeals also and ratio of this case has to be followed and appeals may be dismissed. We have carefully perused NOCIL case and we find that the Madura Coats case has been discussed and analysed but it has not been followed in entirety. In para 23 (per majority opinion) exercise has been made to reconcile different contentions raised by both sides regarding meaning sought to be attached to the words “that article” and it has been stated as under:
“The proper way to reconcile these two contentions would be to hold that the articles entrusted by the customer should after the application of the manufacturing process by the job worker, not lose, its essential identity entirely, but should retain its essential identity subject to the effects of the manufacturing process is carried out….”
“The only broad guideline for the applicability of the notification would be that the process applied by the job worker should not be in the nature of manufacture in its primary sense and the resultant product should not be so completely distinct as to lose the original identity itself.”
18. So it can be seen from the above excerpts that what has been held by the Tribunal is that the article should not lose its identity. In light of the judgment in the case of Aditya Mills Ltd. (supra), in the present appeals, the article loses its identity. So, this argument of Sh. Bharucha is not correct. So, we pass the following final order :
All these five appeals are allowed and impugned order of Collector (Appeals) is set aside.