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TMI Blog2017 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ester Filament Yarn on payment of specific basic excise duty of ₹ 9/- per Kg. + 15% on BED as additional Excise duty (T TA). For the purpose of manufacture of the aforesaid goods the respondent purchase the texturised yarn on payment of appropriate duty which is subsequently twisted and thereafter dyed. The exemption notification was proposed to be denied on the ground that for the manufacture of Dyed Polyester Filament Yarn though the duty paid texturised yarn was purchased but captively the same was twisted and no duty was paid on the twisted yarn therefore the condition No. 31 of the notification stand violated. The adjudicating authority denied exemption Notification and confirmed the demand of duty amounting to ₹ 26,25,454/-. Being aggrieved by the Order-in-Original dated 24.03.2005, the respondent filed appeal before the Commissioner (Appeals) who vide the impugned order set aside the Order-in-Original and allow the appeals with consequential relief. Therefore the Revenue is before us. 2. Shri S.V. Nair, Assistant Commissioner (Authorised Representative) appearing on behalf of the Revenue reiterating the grounds of appeal, submits that since the respondent ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant and equipment) for producing single yarn ₹ 9 per kg. Nil 31 Condition No. 31 (i) manufactured out of textured or draw-twisted yarn, falling under Chapter 54 of the First Schedule on which the appropriate duty of excise under the First Schedule, the special duty of excise leviable under the Second Schedule, or as the case may be, the additional duty leviable under the Customs Tariff Act, 1975 has already been paid; and (ii) no credit under rule 3 or rule 11 of the CENVAT Credit Rules, 2002 has been availed in the process of dyeing printing, bleaching or mercerising in the manufacture of dyed, printed, bleached or mercerised yarn. From the above condition 31(i), it can be seen that the dyed yarn is concessionally exempted if manufactured out of texturised yarn on which duty of Excise was paid. In the fact of the present case, the Dyed Polyester Filament Yarn was manufactured out of duty paid texturised yarn. Though after purchase the duty paid texturised yarn, it is first used in the process of twisted yarn which in turn used in the manufacture of Dyed Polyester Filament Yarn. There is no dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been availed by the appellant. That being so, an inevitable conclusion would be that the condition of notification stand satisfied by the appellant. 5. We also note that an identical condition in Notification No. 6/2002-C.E. was the subject matter of the Tribunal s decision in case of Precot Mills Ltd. v. CCE, Bangalore, 2005 (183) E.L.T. 407 (Tri.-Bang.). Tribunal while dealing with the said issue, has held in favour of the assessee by observing as under: 6. We have carefully considered the rival contentions. The point to be decided in this case is whether the appellant is entitled to claim exemption under Sl. No. 97 in respect of the dyed yarn manufactured out of the doubled yarn which availed complete exemption from duty. The decision on this point involves the interpretation of the following expression used in condition 19(ii) of the Notification No. 6/2002:- If manufactured out of yarn on which appropriate duty of excise has already been paid. It is true that the dyed yarn was manufactured out of the doubled yarn on which no duty was paid. But it is also true that the dyed yarn was manufactured, out of doubled yarn manufactured out of single ya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal decided the identical issue the same has reproduced below:- 5. The Revenue relied on the decision of the Apex Court in the case of CCE, Vadodara v. Dhiren Chemical Industries [2002 (139) E.L.T. 3 (S.C.)] and maintained that the doubled yarn did not suffer any duty and hence, the benefit of Notification No. 6/2002 under Sl. No. 97 will not be applicable to the dyed yarn which is converted from doubled yarn. While giving comments on the appeal, the Revenue has observed that the appellants contention that if the duty is paid at the doubling stage, they would be eligible for the CENVAT Credit of the same at the dyeing stage and in effect, it would be revenue neutral appears to be correct. 6. We have carefully considered the rival contentions. The point to be decided in this case is whether the appellant is entitled to claim exemption under Sl. No. 97 in respect of the dyed yarn manufactured out of the doubled yarn which availed complete exemption from duty. The decision on this point involves the interpretation of the following expression used in condition 19 (ii) of the Notification No. 6/2002 :- If manufactured out of yarn on which appropriate duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dyed, printed, bleached or mercerized yarn. According to Revenue, when Dyed Texturised Yarn is cleared in terms or Notifn. No. 06/02 CEX dated 01.03.02 (S.No.126) which is made out of 'Twisted Yarn' which attracts 'NIL rate of duty. Thus, the exemption will not be available if inputs are exempted from excise duty or subject to 'NIL' rate of excise duty. Therefore, the appellants have not fulfilled the conditions and arc not entitled for benefit under S.No.126 of Notfn. No. 06/02 dated 01.03.02. I find that the appellants have manufactured dyed yarn out of duty paid texturised polyester filament yarn without availing input stage cenvat credit and this is not disputed by the department either in the show cause notice or in the order-in-original. The relevant exemption Notifications provides exemption to dyed yarn if manufactured out of duty paid texturised yarn without availing input stage credit. Accordingly, the appellants have satisfied the condition of the Notfn. and availed the exemption. The department has purported to deny the exemption only on the ground that they have manufactured the dyed yarn out of exempted twisted yarn and therefore not entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when made out or intermediate exempted double yarn converted from the single yarn on which the appropriate duty was discharged. In the instant case dyed yarn of Chapter No.54 is admittedly manufactured out or duty paid texturised yarn and therefore exemption to dyed yarn cannot be denied simply on account of use of intermediate exempted twisted yarn. The relied upon case law fully covers the disputed issue. On the same analogy in the instant case it can be construed that 'Dyed Twisted Yarn' was manufactured out of textured or draw twisted yarn railing under Chapter 54 on which appropriate duty of excise has been paid and no credit is availed in the process or dyeing, The condition of the Notfn. requires only to prove the duty paid character or texturised yarn taken as basic raw material for the purpose of dyeing. There is no condition in the Notfn. that twisted yarn cannot undergo further process of twisting before dyeing. In the circumstances, the appellants interpretation of condition No. 31; Sl. No. 126 of Notfn. No. 06/02 dated 01.03.2002 appears to be correct. In view of above facts and circumstances. I find no reason to sustain the said Order-in-Originals. I therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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